Evaluate world airlines use of air miles
Course:- Managerial Accounting
Reference No.:- EM13182323

Assignment Help
Expertsmind Rated 4.9 / 5 based on 47215 reviews.
Review Site
Assignment Help >> Managerial Accounting

Pacific Airlines has three service departments; ticketing, baggage handling, and aircraft maintenance. Costs of these departments are allocated to two revenue producing departments, domestic and international flights. Costs for the service departments are not separated into fixed and variable and the totals areas follows:

Ticketing $4,000,000
Baggage handling $2,000,000
Aircraft maintenance $6,000,000

Air miles are as follows:
Domestic 10,000,000
International 30,000,000

(a) Allocate the service department costs based on air miles.
(b) Evaluate World Airlines use of air miles as a basis for allocation. Do you think the cause-and-effect relationship is strong?
(c) Suggest alternative methods toallocate the servicedepartment costs.

Put your comment

Ask Question & Get Answers from Experts
Browse some more (Managerial Accounting) Materials
The trial balances before and after adjustment for Matthews Company at the end of its fiscal year are presented on the next page - Prepare the adjusting entries that were mad
Large traded companies like Target, Ford, Apple, etc. are easy to find this type of information on. We recommend you go straight to Hoover's Pro database to find a company p
Assume that Mucky Duck uses target costing. What is the price that Mucky Duck would charge the retailer for the All-Body swimsuit? What is the highest acceptable manufactur
Consider your professional experiences as well as your review of the Required and/or Optional Resources and determine what type of variances might be the most alarming to se
As a production manager, one of your main tasks is to enhance efficiencies by either increasing productivity or reducing cost. Find out whether the responsibility reports re
Prepare a cash budget for the months of October, November and December 2015. Write a report on the cash position over this period, and in particular on ways in which you think
Focusing on a 10 percent required rate of return, what would be the opportunity cost to the company of using the ship in the Caribbean/Eastern Canada itinerary rather than a
What is the company's earnings per share for Year 2? What is the company's price-earnings ratio for Year 2? What is the company's dividend payout ratio for Year 2? What is the