Colorado Airlines is operating at capacity on its Denver-to-New York route, offering three flights each day on this route, using Boeing 737's, each with a capacity of 135 passengers. Airline management wants to determine the least expensive way to increase daily capacity from 405 passengers to 540 passengers. One possibility is to add one more Boeing 737 per day. The other possibility is to replace the current equipment with Boeing 757's, which hold 180 passengers each. In either case, management believes the planes will continue to operate at capacity. To ascertain the least expensive way to increase passenger capacity on the Denver-toNew York route, management has asked you to determine what "drives" the airline's operating costs.

Required:

Consider the following cost drivers:

a. Number of flights per day

b. Number of miles flown per day

c. Number of passengers served per day

d. Number of passenger miles (miles flown per day multiplied by number of passengers)

For each of the following costs, identify the most appropriate cost driver from the above list.

1. Passenger meals 2. Airplane fuel 3. Ground personnel who refuel the plane, and mechanics on the ground 4. Ground personnel who serve passengers at the ticket counter and at the gate.

5. Cockpit crew salaries 6. Flight attendant salaries 7. Economic depreciation of the airplane (i.e., without regard to the depreciation method chosen for accounting purposes, choose the cost driver that best captures the wear and tear on the equipment, and determines the economic life of the plane).

8. Personnel who handle baggage