Managerial Accounting: Creating Value in a Dynamic Business Environment 11th Edition

Discussion: Managerial Accounting

What is the nature of costs in the airline industry and how can airlines manage or reduce their costs?

Besides the required readings for this module, please use specific and current examples to address this question.

It is important to understand that the cost of idle time is treated as manufacturing overhead. Idle time is a normal cost of the manufacturing operation that should be spread out among all the manufactured products. An alternative method would be to charge the cost of idle time to a particular job that happens to be in process when the idle time occurs. Idle time often results from a random event, such as a power outage, weather conditions, and mechanical issues. Charging the cost of the idle time resulting from such a random event to only the job that happened to be in process at the time would overstate the cost of that job.

How does managerial accounting treat idle time in the airline industry? With references to research