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TASK:
You have been hired to provide a profitability analysis for each quarter during the fiscal year 2009. Keep in mind that revenues have already been projected for 2009 (Exhibit 2). Your task is to come up with projected exenses (there are 10 expenses: salaries and wages; aircraft fuel; aircraft rentals, airport fees; aircraft maintenance; depreciation; distribution costs; passenger services; regional capacity purchases and other) so that you can compute projected profits
(Revenues – Expenses = Profit). Additionally, compute and report the Contribution Margin percentage for each quarter
in 2009.
Your client is concerned about incurring losses and would like your professional advice as a cost accountant on this
matter. While your primary job is to come up with the profitability report for each quarter in 2009, a secondary task will
be to provide possible solutions for the reduction of costs. Since you are in the best position to understand what drives
costs, your input to the client in this regard is very important.
You will report your findings in a memorandum addressed to Global Airline’s CEO. One of your challenges is to address
the issues completely yet concisely. It does not help your grade to write more than is necessary. Your ONE page memo
(front side of paper only, think of it as an executive summary) must be clearly supported and cross-referenced with your
supporting profitability projections (e.g. tables, charts, external evidence, etc. in the appendix). Effective cross-
referencing between the memo and the supporting financial projections is VERY important; please make sure it is clear
to me where the numbers are coming from. While the written memo should not exceed ONE page, the appendix with
tables, charts, external evidence, etc. does not have a limitation on length.
Keep in mind that there is no one right answer as these type of analyses require judgement and differing assumptions.
Your accounting analysis will vary from everyone in class and that is OK. Your grade is mostly based on how well you
make and support a persuasive argument to your client
MS Excel Add-in required:
For purposes of completing Case 1, you will need to use regression analysis in MS Excel. In order to perform regression
analysis in MS Excel, you must have the Data Analysis toolpack loaded on the software. This is a free add in for MS Excel
and it’s relatively easy to load; just do a search online for your version of MS Excel.
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