Question

Stuart Airlines is a small airline that occasionally carries overload shipments for the overnight delivery company Never-Fail, Inc. Never-Fail is a multimillion-dollar company started by Wes Never immediately after he failed to finish his first accounting course. The company’s motto is “We Never-Fail to Deliver Your Package on Time.” When Never-Fail has more freight than it can deliver, it pays Stuart to carry the excess. Stuart contracts with independent pilots to fly its planes on a per-trip basis. Stuart recently purchased an airplane that cost the company $6,375,000. The plane has an estimated useful life of 25,500,000 miles and a zero salvage value. During the first week in January, Stuart flew two trips. The first trip was a round trip flight from Chicago to San Francisco, for which Stuart paid $260 for the pilot and $210 for fuel. The second flight was a round trip from Chicago to New York. For this trip, it paid $210 for the pilot and $105 for fuel. The round trip between Chicago and San Francisco is approximately 4,600 miles and the round trip between Chicago and New York is 1,400 miles.

Required

1. Select if the costs mentioned below are direct or indirect.

2. Determine the total cost of each trip.

Total cost: Chicago to San Francisco

Chicago to NY

Answer 1