Discussion
Fixed costs of \( 6.0 \) million dollars a year are spread over \( 3000 \) block hours. The fixed cost per block hour is
Answer: D
Correct answer: 2000 dollars
Divide the annual fixed cost by the block hours flown:
\[ \frac{6\,000\,000}{3000} = 2000\ \mathrm{dollars\ per\ block\ hour} \]
The figure falls as utilisation rises: at 4000 hours the same fixed cost would be 1500 dollars an hour. That is the whole arithmetic behind high-utilisation operating models - the aircraft's fixed charges are unaffected by how much it flies, so every additional hour dilutes them.
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