Discuss about the effects to revenue of the company. Since fuel costs are the major operating...

Discuss about the effects to revenue of the company. Since fuel costs are the major operating costs of an airline, a marginal change in crude oil prices can significantly impact its operating expenses, and, in turn, its revenue.

Expert Solution

Fuel costs are a large operating expense for the airline industry, amounting to almost 20-25% of operating expenses of the companies. This is a huge percentage and therefore, even a slight change in the prices of the fuel heavily affects the revenue of the industry as a whole.

Not only fluctuating prices lead to high changes in the revenue as well as the growth of the companies, but it also affects the profit margins of the company and undermines future investments and the research and development programs.

However, to ensure more stability in the revenue, there are many steps taken by airline companies. For example, most of the airlines companies are in contracts with oil companies. these contracts are generally for five years and the prices of the oil are fixed in these contracts. This helps the companies in overcoming the challenges posed by the highly volatile oil market.

Similarly, the big companies in the airline industry are investing in oil refineries to manage the prices and the supply of oil efficiently. This helps them in becoming more efficient in managing the company even in the face of fluctuating oil prices and diminishing supply.

keosha answered 5 months ago

1. One of the major duties of managers is to control expenses. Since labor costs in...

1. One of the major duties of managers is to control expenses. Since labor costs in health care is often 60% or more of total operating costs, discuss management’s role in controlling labor costs, including the use of part-time staff, control of over-time, outsourcing and other methods.

discuss the major global economic developments since world war II

Taking into account my operating and fuel costs, airport charges (gotta mow the runway every so...

Taking into account my operating and fuel costs, airport charges (gotta mow the runway every so often), etc., the estimated cost per flight is $2,000. I expect to fly full flights (100 passengers…I cram them into my little Cessna), so the marginal cost on a per-passenger basis is $20 ($2,000/100). Finally, I've estimated my demand curve for the local area to be P = 120 – 0.1Q, where P is the fare in dollars, and Q is the number of...

You are given the following data for year 1: revenue = 200, cash operating costs =...

You are given the following data for year 1: revenue = 200, cash operating costs = 120, depreciation 20 and the tax rate of 25%. Calculate the after tax operating cash flow (OCF) for the project in year 1 Select one: a. $37.5 b. $80 c. $65 d. $45 Stock A has a beta of 1.0 and very high specific risk. If the expected return on the market is 15%, then according to the CAPM the expected return on Stock...

Discuss the following statement: Since standard costs are recorded in the inventory accounts in a standard...

Discuss the following statement: Since standard costs are recorded in the inventory accounts in a standard cost system, actual costs are ignored.

Question 1 Revenues Revenue from sales of goods and services .......................... $100,000,000 Operating costs and expenses:...

Question 1 Revenues Revenue from sales of goods and services .......................... $100,000,000 Operating costs and expenses: Cost of products and services sold ....................................... $30,000,000 Selling expenses ................................................................... $3,000,000 Administrative expense ........................................................ $4,000,000 Total operating costs and expenses ............................... $37,000,000 Income from operations.............................................................. $63,000,000 Interest expense (corporate bonds & loans) ............................... $500,000 Non-recurring expense (Legal expenses/fines in settling a federal antitrust suit .............................................. $100,000 Income taxes ............................................................................... $740,000 Net income ................................................................................. $61,660,000 During this year of operation, Bonus Realty owned and...

2017 2018 2019 Total Revenue $ 4,476,412 $ 4,864,985 $ 5,586,369 Restaurant operating costs (exclusive of...

2017 2018 2019 Total Revenue $ 4,476,412 $ 4,864,985 $ 5,586,369 Restaurant operating costs (exclusive of D&A): Food, beverage and packaging 1,535,428 1,600,760 1,847,916 Labor 1,205,992 1,326,079 1,472,060 Occupancy 327,132 347,123 363,072 Other operating costs 651,644 680,031 760,831 Cost of goods sold $ 3,720,196 $ 3,953,993 $ 4,443,879 Gross Profit 756,216 910,992 1,142,490 SG&A 296,388 375,460 451,552 Depreciation and amortization 163,348...

A firm in a perfectly competitive industry knows the following about its costs and revenue. The...

A firm in a perfectly competitive industry knows the following about its costs and revenue. The firm would like to maximize profit and has hired a consultant for advice. Price Q of Output Total Revenue Total Cost Total Fixed Cost P? Q? 7,400 TC? 3,300 Total Variable Cost Average Total Cost Average Variable Cost MC TVC? 9 3 5 Part 1. Average Fixed Cost ____ Part 2. Price _____ Part 3: Quantity _____ Part 4. Total Cost _____ Part 5. What is the value of...

Consider a monetary contraction in an economy operating under flexible exchange rates. Discuss the effects on...

Consider a monetary contraction in an economy operating under flexible exchange rates. Discuss the effects on consumption, investment and net exports. Explanation in words as well as use of graphs are required

Discuss the effects on consumption, investment, and net exports in an economy operating under flexible exchange...

Discuss the effects on consumption, investment, and net exports in an economy operating under flexible exchange rates when the following policies take place. a. A monetary expansion b. A fiscal expansion.

Question