Question
In: Accounting
Changing the Cost Formula for a Month to the Cost Formula for a Year During the...
Changing the Cost Formula for a Month to the Cost Formula for a Year During the past year, the high and low use of three different resources for Fly High Airlines occurred in July and April. The resources are airplane depreciation, fuel, and airplane maintenance. The number of airplane flight hours is the driver. The total costs of the three resources and the related number of airplane flight hours are as follows:
| Resource | Airplane Flight Hours | Total Cost |
|---|---|---|
| Airline Depreciation: | ||
| High | 44,000 | $18,100,000 |
| Low | 28,000 | $18,100,000 |
| Fuel: | ||
| High | 44,000 | 445,896,000 |
| Low | 28,000 | 283,752,000 |
| Airplane maintenance: | ||
| High | 44,000 | 15,976,000 |
| Low | 28,000 | 12,080,000 |
Required:
If required, round calculations and answers to nearest dollar.
1. Develop an annual cost formula for airplane depreciation.
Total annual cost of airplane depreciation = ____ x ($__________)
Develop an annual cost formula for fuel.
Total annual cost of fuel = $_________×___________
Develop an annual cost formula for airplane maintenance.
Total annual cost of airplane maintenance = (___________x $___________) + ($__________×_____________)
2. Using the three annual cost formulas that you developed, predict the cost of each resource in a year with 487,000 airplane flight hours.
Total annual cost of airplane depreciation $
Total annual cost of fuel $
Total annual cost of airplane maintenance $
Solutions
Expert Solution
| 1) annual total cost of airplane depreciation = 12*18100000 |
| variable cost of fuel = (445896000/44000) = 10134 |
| total annual cost of fuel = 10134*annual no of airplane flight hours |
| airplane maintenance variable cost = (15976000-12080000)/(44000-28000) |
| airplane maintenance variable cost = 243.5 |
| airplane maintenance fixed cost = total cost-variable cost |
| airplane maintenanxe fixed cost = (15976000-44000*243.5) |
| airplane maintenancce fixed cost = 5262000 |
| annual cost formula = (5262000*12)+(243.5*annual no of airplane flight hrs) |
| 2) total annual cost of airplane depreciation = 12*18100000 = 217200000 |
| total annual cost of fuel = 10134*487000 = 4935258000 |
| total annual cost of airplane maintenance = (12*5262000)+(487000*243.5) |
|
total annual cost of airplane maintenance = 181728500 |
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ekkarill92 answered 1 year agoRelated Solutions
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