Blue Star Airline provides passenger airline service, using small jets. The airline connects four major cities: Charlotte, Pittsburgh, Detroit, and San Francisco. The company expects to fly 170,000 miles during a month. The following costs are budgeted for a month: Fuel $2,120,000 Ground personnel 788,500 Crew salaries 850,000 Depreciation 430,000 Total costs $4,188,500 Blue Star management wishes to assign these costs to individual flights in order to gauge the profitability of its service offerings. The following activity bases were identified with the budgeted costs: Airline Cost Activity Base Fuel, crew, and depreciation costs Number of miles flown Ground personnel Number of arrivals and departures at an airport The size of the company's ground operation in each city is determined by the size of the workforce. The following monthly data are available from corporate records for each terminal operation: Terminal City Ground Personnel Cost Number of Arrivals/Departures Charlotte $256,000 320 Pittsburgh 97,500 130 Detroit 129,000 150 San Francisco 306,000 340 Total $788,500 940 Three recent representative flights have been selected for the profitability study. Their characteristics are as follows: Description Miles Flown Number of Passengers Ticket Price per Passenger Flight 101 Charlotte to San Francisco 2,000 80 $695.00 Flight 102 Detroit to Charlotte 800 50 441.50 Flight 103 Charlotte to Pittsburgh 400 20 382.00 Required: Question Content Area A. Determine the fuel, crew, and depreciation cost per mile flown. $fill in the blank per mile B. Determine the cost per arrival or departure by terminal city. Charlotte $fill in the blank Pittsburgh $fill in the blank Detroit $fill in the blank San Francisco $fill in the blank Question Content Area C. Use the information in (1) and (2) to construct a profitability report for the three flights. Each flight has a single arrival and departure to its origin and destination city pairs. Enter all amounts as positive numbers, except for a negative income from operations. Blue Star AirlineFlight Profitability ReportFor Three Representative Flights Flight 101 Flight 102 Flight 103 Passenger revenue $fill in the blank $fill in the blank $fill in the blank Fuel, crew, and depreciation costs $fill in the blank $fill in the blank $fill in the blank Ground personnel fill in the blank fill in the blank fill in the blank $fill in the blank $fill in the blank $fill in the blank Flight income from operations $fill in the blank $fill in the blank $fill in the blank .

Blue Star Airline provides passenger airline service, using small jets. The airline connects four major cities: Charlotte, Pittsburgh, Detroit, and San Francisco. The company expects to fly 170,000 miles during a month. The following costs are budgeted for a month: Fuel $2,120,000 Ground personnel 788,500 Crew salaries 850,000 Depreciation 430,000 Total costs $4,188,500 Blue Star management wishes to assign these costs to individual flights in order to gauge the profitability of its service offerings. The following activity bases were identified with the budgeted costs: Airline Cost Activity Base Fuel, crew, and depreciation costs Number of miles flown Ground personnel Number of arrivals and departures at an airport The size of the company's ground operation in each city is determined by the size of the workforce. The following monthly data are available from corporate records for each terminal operation: Terminal City Ground Personnel Cost Number of Arrivals/Departures Charlotte $256,000 320 Pittsburgh 97,500 130 Detroit 129,000 150 San Francisco 306,000 340 Total $788,500 940 Three recent representative flights have been selected for the profitability study. Their characteristics are as follows: Description Miles Flown Number of Passengers Ticket Price per Passenger Flight 101 Charlotte to San Francisco 2,000 80 $695.00 Flight 102 Detroit to Charlotte 800 50 441.50 Flight 103 Charlotte to Pittsburgh 400 20 382.00 Required: Question Content Area A. Determine the fuel, crew, and depreciation cost per mile flown. $fill in the blank per mile B. Determine the cost per arrival or departure by terminal city. Charlotte $fill in the blank Pittsburgh $fill in the blank Detroit $fill in the blank San Francisco $fill in the blank Question Content Area C. Use the information in (1) and (2) to construct a profitability report for the three flights. Each flight has a single arrival and departure to its origin and destination city pairs. Enter all amounts as positive numbers, except for a negative income from operations. Blue Star AirlineFlight Profitability ReportFor Three Representative Flights Flight 101 Flight 102 Flight 103 Passenger revenue $fill in the blank $fill in the blank $fill in the blank Fuel, crew, and depreciation costs $fill in the blank $fill in the blank $fill in the blank Ground personnel fill in the blank fill in the blank fill in the blank $fill in the blank $fill in the blank $fill in the blank Flight income from operations $fill in the blank $fill in the blank $fill in the blank .

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter7: Allocating Costs Of Support Departments And Joint Products

Section: Chapter Questions

Problem 34P: AirBorne is a small airline operating out of Boise, Idaho. Its three flights travel to Salt Lake...

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Question Content Area

A. Determine the fuel, crew, and depreciation cost per mile flown.
$fill in the blank per mile

B. Determine the cost per arrival or departure by terminal city.

Charlotte	$fill in the blank
Pittsburgh	$fill in the blank
Detroit	$fill in the blank
San Francisco	$fill in the blank

Question Content Area

C. Use the information in (1) and (2) to construct a profitability report for the three flights. Each flight has a single arrival and departure to its origin and destination city pairs. Enter all amounts as positive numbers, except for a negative income from operations.

Blue Star AirlineFlight Profitability ReportFor Three Representative Flights

	Flight 101	Flight 102	Flight 103
Passenger revenue	$fill in the blank	$fill in the blank	$fill in the blank
Fuel, crew, and depreciation costs	$fill in the blank	$fill in the blank	$fill in the blank
Ground personnel	fill in the blank	fill in the blank	fill in the blank
	$fill in the blank	$fill in the blank	$fill in the blank
Flight income from operations	$fill in the blank	$fill in the blank	$fill in the blank

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Fuel	$2,120,000
Ground personnel	788,500
Crew salaries	850,000
Depreciation	430,000
Total costs	$4,188,500

Airline Cost	Activity Base
Fuel, crew, and depreciation costs	Number of miles flown
Ground personnel	Number of arrivals and departures at an airport

Terminal City		Ground Personnel Cost		Number of Arrivals/Departures
Charlotte			$256,000		320
Pittsburgh			97,500		130
Detroit			129,000		150
San Francisco			306,000		340
	Total			$788,500		940

	Description	Miles Flown	Number of Passengers	Ticket Price per Passenger
Flight 101	Charlotte to San Francisco	2,000		80	$695.00
Flight 102	Detroit to Charlotte	800		50	441.50
Flight 103	Charlotte to Pittsburgh	400		20	382.00