need ur help ....:)))
"Jet International Airlines (JIA) – a Republican Country based
airliner is operating more than 1,400 flights annually with 23 planes
of different ranges on domestic and international routes. With a
stable stream of cash flows, the company has earned a pre tax profit
of Rs. 3,450 million during the last year. Due to cost effective
operations, JIA is enjoying competitive position in the industry.
The company's Strategic Business Development Unit (SBDU) has recently
discovered Green Valley - a jewel among the many beautiful valleys in
the district of Northern City in the Northern area of Country and
features pine forests, crystal clear lakes, cool mountain streams,
Deep Cold River, and famous for its trout. SBDU has advised the top
management to launch a regular daily flight from Central City to
Northern City on day round trip basis. After going through some
preliminary study, JIA has decided to operate this route as an
independent tour operator. A new business segment in the company has
been set up under the name of "Tour Entertainers" (TE).
JIA has inducted staff of 10 qualified persons and has planed to incur
Rs. 0.5 million on their training. The company has signed a 3-years
lease contract with Planes Lessor Incorporation (PLI) to acquire a new
100-seats "Smart Plane" to operate on this rout. PLI is also
responsible for both the periodic and on-demand maintenance of this
plane. The company's SBDU head – Mr. Management Accountant has
estimated the following cost figures:
Monthly Fixed Costs (FC):
Lease Rentals of the plane Rs. 14.28 million
Flight Crew expenses 2.25 million
Office Salaries etc. 1.78 million
Office expenses at Northern City 0.89 million
After conducting meetings with various divisions, the SBDU has
analyzed the following costs per person on a day round trip on this
tour flight and the Management Accountant has verified these figures.
They are:
Passenger boarding cost Rs. 8,000
Fuels and ready-to-take-off expenses 1,500
Meals and other services 350
Other value added (net, phone, movies etc) 150
While feeling calm upon the feedback of this new venture's advertising
campaign, the central management of JIA has approved to launch
introductory price of Rs. 18,000 per day round trip ticket for each
passenger."
Required:
Keeping in view the above situation answer the following questions:
1) Determine the number of passengers that JIA must carry each
month to break even.
2) If at breakeven determined in (1) above, JIA operates any
flight at full of passengers, determine the total net income of the
flight per day round trip.
3) JIA has a promotional plan to carry 10 newly wed couples to
Northern City every month free of cost by balloting. In this case, how
many additional passengers, JIA must carry to break even in each
month?
4) At present break even level, each flight is left unfilled with
some passenger seats. To fill these seats, the TE manager is thinking
to offer 5 members group, a complete 3-day trip armed with complete
boarding and lodging, 3 group dinners, and daily sight seeing with the
company maintained vehicle including driver and a guide on an
additional cost of Rs. 25,000 per passenger. SBDU has approved per
passenger charges at Rs. 27,000 in addition to a ticket at discount
price of Rs. 8,000 per passenger. You are required determine the worth
of this proposal.
Just provide your final answers in concise manner. Avoid for providing
details of formulas and calculations
--
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