Question

Calor Changing the Cost Forms for a Months to the Cost Formula for a Year During the past year, the high and low use of three different resources for Fly High Airlines occurred in July and April. The resources are airplane depreciation, fuel, and airplane maintenance. The number of airplane flight hours is the driver. The total costs of the three resources and the related number of airplane flight hours are as follows: Resource Airplane Flight Hours Total Cost Airplane depreciation: $ 18,200,000 44,000 28,000 Low $ 18,200,000 Fuel: High 44,000 28,000 445.096,000 283,752,000 Airplane maintenance: 44,000 Low 15,912,000 12,045,000 20,000 Required: If required, round calculations and answers to nearest dollar 1. Develop an annual cost formula for airplane depreciation Total annual cost of airplane depreciation - Develop an annual cost formula for fuel Total annual cost of fuels Check My Work 5 more Check My Works remaining Next > Email Instructor mal bota Save and submit Assignment for Grading MacBook Pro 90 MT?| M

Answer 1

1 Answer til The company an estimate cost of product or sewice at the various levels of activity. It will be helpful to assess the profitability Qt various levels of activity cost : Variable + Eixel - JA—the question, Fly-High Aidioes uses bigh-low technique to estimate the costs In High - low method, the two dete set of high and low estinacion_taken into account and the remaining taker difference of such high and low point costs and cost driver to ourive variable costs and then from such total costo variable costs gets deducted to arrive the fixel costs Development of Verlays cost formulas for Ely High Airlines ca) Amelage Depreciation. In the total cost sheet of fly High Airlines, we have seen that gir plage depreciation has some Costs at both high and low flight horus - Variable Aivise Depreciation : $0 per flight hour Fixed Allige Depreciation :$ 18200,000 ; Total Annual cost for Airline Despreciation = $189.0000° || Cb) Aix plage_full ... Variable Airline Eyel qt High = $ 445896000 44000 flight Hours $ 10134 per flight hour z in Auvine fuel at low $ 283752000 : 28000 flight Horus $ 10134 peo flight hoy

In the give calculation, airplane_fyel hos corts, they have no fixed costs ally variable :: Total Annual Cost for miplane_fyel.:_10134_per. Flight Holv. وووطمنهم عمهاAirp ( | = Variable cont per __Flight Hoyd $ (159/2.000 - 12048000) (44000 - 28000) Flight Hour 5. - $ 3864000 16000 Flight Hours - $ 24).50 per Flight Houyen = Fixed cost per Flight Houn Total cost at High - Variable cost at High : $ 159/2000 - ($241:50 X 44000 Flight_Hoy's) = $ 5286000 Total Annual Coil for = Aivtige M919.679ce t $(241.50 X Number of Elight_Hoyos 2 $_5286000.__ 2. Using the three of cost of each flight hoy annual cost formulas that we developed prediction resource_1 9 fegy_with_486000_14 plene

$ 18200 000 Total Annual Cartes Polando Lof Alvplane Oponeciation lo que Total Annual cost of a to hond $ 4925124000 Aixplena fyel ( 486000 Flight Hoxxx $ 10134) $ 122655000 Total Annual Cost of Aivplage Maiatzia ance $ ( 486000 flight hours x $24150) + $ 5286000 Total costs $ 5065979000