What are the activity and the cost driver for the suggested baggage-traffic basis? Jet Green Airways historically

Question:

What are the activity and the cost driver for the suggested baggage-traffic basis?

Jet Green Airways historically distributes the indirect costs of lost and damaged baggage to its three major hubs using a basis of annual number of flights in and out of each hub. Last year $667,500 was distributed as follows:


What are the activity and the cost driver for the


The airline’s baggage management director suggests that an allocation on the basis of baggage traffic, not flights, will better represent the distribution, primarily based on the fact that the high fees now charged to passengers to check luggage have significantly changed the number of bags handled at the major hubs. Total number of bags handled during the year are 2,490,000 at DFW, 1,582,400 at YYZ, and 763,500 atMEX.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Engineering economy

ISBN: 978-0073376301

7th Edition

Authors: Leland Blank, Anthony Tarquin

Question Posted: