Question:
Fares Decision
Fare per Mile 31 Cents
Fare Structure Discount
Cabin/Food Service No cabin/food service.
Marketing Decision
Promotion Budget $2,500
Advertising Budget $2,500
In-Flight Magazine Yes
Current Salespersons 1
Salespersons Hired 0
Estimated Salesperson Cost $12,000
Cargo Marketing Budget $0 Operations Management
Need help explaining why the increase from last quarter to this current quarter. Please provide references to support the decisions.
The company has taken the following decisions for the purpose of various fares of the operations:
22B - 400miles - Regular Fare
23C - 340miles - Regular Fare
24D - 360miles - One-Month Sale
25E - 400miles - Two-Month Sales
On the basis of the overall analysis of the key business forms and the key expenses it can be said that the decision taken has been taken considering each and every item of expenses and that there is proper control over the expenses and the overall management of the expenses. It is understandable that the management has made the adjustment for the various prices and the various analysis of the key costs, and after the same the decision to make the fares and the overall expenses have been considered. We would consider each of the decisions individually to review the management intention and then bring a confirmation for the reason for such decisions.
Case 1 - The distance covered is sufficiently large and hence the costs would be spreadup. There is a general consideration for the economies of costs and that has found its relevance in this area. Hence regular fares can be charged to the guests accordingly.
Case 2 - In this instance also the distance covered is large. However there is also large number of passengers to share the overall costs and hence to ensure the benefit of the costs changes and the relative impact of the changes. There is a general consideration of the key costs and the key aspects of the enterprise on an overall manner.
Case 3 - Since the distance has reduced and so has the passengers, there has to be additional levy of the costs and the expenses accordingly to ensure that there is proper accounting and the privity to the contract is well ensured.
Case 4 - With the addition of the distance there is addition of passengers and also the overall form of management of the enterprise. It is therefore important for the concern to ensure proper management of those key concerns for proper accounting and proper control purpose. Hence the adequate approvals are required for this purpose and hence the same would be required for the purpose of proper allowance consideration.