Lofty Airlines has a flight for which the regular ticket price is $200 and the variable costs per passenger are $50. Fixed costs assigned to each flight are $12,000. Each flight has a capacity of 125 seats, with an average of 95 seats sold at the regular price. To attract customers to the last 30 unsold seats, Lofty discounts the tickets by 50% for standby passengers. The contribution margin per standby passenger is

a. $25

b. $150

c. $100

d. $50.

Question

Business

Julian Jennings

10 March, 11:10

Lofty Airlines has a flight for which the regular ticket price is $200 and the variable costs per passenger are $50. Fixed costs assigned to each flight are $12,000. Each flight has a capacity of 125 seats, with an average of 95 seats sold at the regular price. To attract customers to the last 30 unsold seats, Lofty discounts the tickets by 50% for standby passengers. The contribution margin per standby passenger is

a. $25

b. $150

c. $100

d. $50.

+2

Answers (1)

Know the Answer?

Floyd · Answer 1

The correct answer is D.

Explanation:

Giving the following information:

Lofty Airlines has a flight for which the regular ticket price is $200 and the variable costs per passenger are $50. To attract customers to the last 30 unsold seats, Lofty discounts the tickets by 50% for standby passengers.

Contribution margin = selling price - unitary variable cost

CM = 100 - 50 = 50