Aerotraiteur SA is a French company that provides passenger and crew meals to airlines operating out of
Question:
Aerotraiteur SA is a French company that provides passenger and crew meals to airlines operating out of the two international airports of Paris – Orly and Charles de Gaulle (CDG). The operations at Orly and CDG are managed separately, and top management believes that there may be benefits in greater sharing of information between the two operations. To better compare the two operations, an activity-based costing system has been designed with the active participation of the managers at both Orly and CDG. The activity-based costing system is based on the following activity cost pools and activity measures:
The operation at CDG airport serves 1.5 million meals annually on 7,500 flights for ten different airlines. (Each airline is considered one customer.) The annual cost of running the CDG airport operation, excluding only the costs of raw materials for meals, totals €29,400,000.
The results of employee interviews at CDG are displayed below:
Required
1. Perform the first-stage allocation of costs to the activity cost pools. (Use Exhibit 9.4 as a guide.)
2. Compute the activity rates for the activity cost pools.
3. The Orly operation has already concluded its activity-based costing study and has reported the following costs of carrying out activities at Orly:
Comparing the activity rates for the CDG operation you computed in Requirement 2 above to the activity rates for Orly, do you have any suggestions for the top management of Aerotraiteur SA?
Step by Step Answer:
Management Accounting
ISBN: 9780077185534
6th Edition
Authors: Will Seal, Carsten Rohde, Ray Garrison, Eric Noreen