Could someone help me this problem? Thank you! Eagle Airlines is a small airline
ID: 2584129 • Letter: C
Question
Could someone help me this problem?
Thank you!
Eagle 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 Eagle to carry the excess. Eagle contracts with independent pilots to fly its planes on a per-trip basis. Eagle recently purchased an airplane that cost the company $6,000,000. The plane has an estimated useful life of 20,000,000 miles and a zero salvage value. During the first week in January, Eagle flew two trips. The first trip was a round-trip flight from Chicago to San Francisco, for which Eagle paid $350 for the pilot and $500 for fuel. The second flight was a round trip from Chicago to New York. For this trip, it paid $300 for the pilot and $300 for fuel. The round trip between Chicago and San Francisco is approximately 4,400 miles and the round trip between Chicago and New York is 1,600 miles.
Required
Select if the costs mentioned below are direct or indirect.
Determine the total cost of each trip.
Determine the total cost of each trip. (Do not round intermediate calculations.)
Pilot DirectCost or IndirectCost Fuel DirectCost or IndirectCost Depreciation DirectCost or IndirectCostExplanation / Answer
a. Pilot Cost and the Fuel Cost are the Direct Cost incurred by Eagle Airlines.
And Depreciation Cost on the Airplane is the indirect Cost.
b. Total cost of each trip is as calculated below:
Depreciation per mile is
6,000,000/20,000,000
0.3
Trip 1
Pilot Cost
350
Fuel Cost
500
Depreciation Cost (0.3*4,400)
1,320
Total Cost
2,170
Trip 2
Pilot Cost
300
Fuel Cost
300
Depreciation Cost (0.3*1,600)
480
Total Cost
1,080
Depreciation per mile is
6,000,000/20,000,000
0.3
Trip 1
Pilot Cost
350
Fuel Cost
500
Depreciation Cost (0.3*4,400)
1,320
Total Cost
2,170
Trip 2
Pilot Cost
300
Fuel Cost
300
Depreciation Cost (0.3*1,600)
480
Total Cost
1,080