Describe the cause and effect relationship

Reference no: EM1350153

World Airlines has three service departments: (1) ticketing, (2) baggage handling, and (3) engine maintenance.The service department costs are estimated for separate cost pools formed by department and are allocated to two revenue-producing departments: (1) domestic flights and (2) international flights.World does not differentiate between fixed and variable costs in making allocations. The following data relate to the allocations:

Budgeted Data

Costs Air Miles

Ticketing $5,000,000

Baggage handling $3,000,000

Engine maintenance $7,000,000

Domestic flights 6,000,000

International flights 24,000,000

Required

a. Allocate the service department costs to the revenue-producing departments using air miles as the allocation base.

b. Evaluate the cause-and-effect relationship resulting from the use of air miles as the allocation base. In which of the cost pools do you think the cause-and-effect relationship is the strongest? Suggest alternative allocation bases for the two remaining cost pools with the weakest cause-and-effect relationship.

Reference no: EM1350153

Questions Cloud

Collaboration and conflict resolution : Examine an instance when you were in a meeting where an agenda was not used. What was the end result of the meeting's proceedings?

Make or buy decision-relevant cost : Davis Company manufactures used parts in production of widgets. When 10,000 items are produced, the costs per unit are:

History of asian americans on the worldview : What are your thoughts concerning the impact of the history of Asian Americans on the worldview of its members?

Main function to input twenty integers in given range : Write a main function to input 20 integers in range of 1-6, function should count number of times the numbers 2 and 5 occur. function must declare statics variables count2 and count5.

Describe the cause and effect relationship : Describe the cause and effect relationship resulting from the use of air miles as the allocation base. In which of cost pools do you think the cause and effect relationship is the strongest?

Need conflict resolution worksheet- small team communication : Which of the following conflict management styles did you select in managing conflict at K24 and check all that apply. Briefly describe why you selected each, or why you chose not to try a particular method.

Describe one possible combination of government spending : Describe one possible combination of government spending increases and tax decreases that would accomplish the same goal.

Definition of moral reasoning : What is the definition of moral reasoning? Describe two similarities and two differences in moral reasoning between South Africa versus the United States?

Find the maximum inclination angle for the board : A circular wire loop of radius 13cm carries a current of 3.66 A. It is placed so that the normal to its plane makes an angle of 34.8° with the uniform magnetic field of magnitude 9.70 T.

User Account

All Pages