Problem $12-56($Algo$)$ Cost Allocation for Travel Reimbursement $($LO $12-1,7)$

Burchill Consultants is a global consulting firm. The firm has a travel policy that reimburses employees for the $$ordinary and necessary$$ costs of business travel and reimburses business$-$class airfare for international and "long" domestic flights. Associates at the firm often mix a business trip with pleasure by either extending the time at the destination or traveling from the business destination to a nearby resort or other personal destination. When this happens, an allocation must be made between the business and personal portions of the trip, so that only the business portion is reimbursed. However, the travel policy is unclear on the allocation method to follow.

Consider this example. An employee obtained a business$-$class ticket for $$8,697$ and traveled the following itinerary.

From To Miles One$-$Way Regular Fare Purpose

Los Angeles Singapore $8,910$ $ $3,536$ Business

Singapore Sydney $4,0482,290$ Personal

Sydney Los Angeles $7,6283,758$ Return

On the date of the flights between Los Angeles and Singapore $($and return$),$ a restricted round$-$trip business$-$class fare of $$4,178$ was available.

Required:

a$.$ Compute the business portion of the airfare according to each of the following independent scenarios:

$1.$ Based on the maximum reimbursement for the employee.

$2.$ Based on the minimum cost to the company.

ASWER

$1.$Business portion of the airfare $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$

$2.$ Business portion of the airfare $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$