Pacific Airways provides air travel services between Los Angeles and Seattle. The cost information per flight is as follows:
Line Item Description Fixed Costs per Flight Variable Costs per Passenger
Plane Depreciation $9,500
Crew Salaries $900
Fuel $2,500 $18
Ground Salaries $1,100 $12
Airport Fees $2,100
Passenger Services $10
Total $16,100 $40
Each flight has a capacity of 150 seats, with an average of 125 seats sold per flight at an average ticket price of $180. Assume Pacific Airways is considering a new service that would provide tickets at half price. Passengers would need to fly standby to receive the discount, but would be provided a flight for a given day of travel. An analysis revealed that an average of 8 existing passengers would use the new discounted tickets for travel. In addition, 15 new passengers would be attracted to the offer.
What is the total variable cost for a flight if the new service is implemented?
1) $1,800
2) $2,040
3) $2,160
4) $2,400
