Cost Analysis Of Airline Industry

Break-even comparability Fixed price + (variable be x true passengers) Is advert to shipping x actual passengers For Flight WC0102, this is how we would elucidate this equation : COSTS=REVENUE 10,000 + 50 x P=200 x P =>10,000=150 x P =>P=10,000 150 =>=66.66 =>=67 So, we croup analyze that trajectory WC0102 must sell 67 seats in order to cut together even. This is the dapple at which court matches revenue for that particular flight. Anything beneath 67 passengers, and it will lose money, anything above 67, and it make money. border costing is used to work come out of the military press the victuals which should be channelised at any committed point. In other words, when you know the fixed and variable be for a flight, you can then work out how such(prenominal) to even each passenger. For example, the 25th passenger will non have the identical mariginal cost (i.e. will not be charged the identical fare) as the 50 th passenger. Again, we can illustrate this point by using a dewy-eyed formula, as follows: circumferential cost formula for x passengers (x = 50 in this example) Fare for Passenger no.

P =Fixed Cost+ variable cost per Passenger P Where x = 50 =>10,000+50 50 =>250This is the marginal cost and hence the fare you should charge the 50 passengers, if you desire this is the people you will achieve utilisation of other marginal costs for flight WC0102 are (Note : if we believe this is the volume we will achieve, then this represents the fare we should charge in order to break even ) P = 1Marginal Cost=10050i.e10,000 + 50 ! 1 P = 10Marginal Cost=1050i.e10,000 + 50 10 P = 25Marginal Cost=450i.e10,000 + 50 25 P = 50Marginal Cost=250i.e10,000 + 50 50 P = 100Marginal Cost=150i.e10,000 + 50 100If you want to get a in full essay, order it on our website: OrderCustomPaper.com

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