Question

Onassis Catering is a Greek company that provides passenger and crew meals to airlines operating out of two international airports in Athens and Corfu. The operations at the two airports are managed separately, and top management believes that there may be benefits to greater sharing of information between the two operations. To better compare the two operations, an ABC system has been designed with the active participation of the managers at both airports. The ABC system is based on the following activity cost pools and activity measures: Activity Cost Pool Meal preparation Flight-related activities Activity Measure Number of meals Number of flights Number of customers Customer service Other (costs of idle capacity and organization-sustaining costs) NA The operation at Athens International Airport (AIA) serves 1 million meals annually on 5,000 flights for 10 different airlines. (Each airline is considered one customer.) The annual cost of running the AIA airport operation, excluding only the costs of raw materials for meals totals 3,879,900. Note: The currency in Greece is the euro, denoted by Annual Cost of the AIA Operation Cooks and delivery personnel wages Kitchen supplies 3,120,000 38,400 243,000 87,000 217,500 174,000 Chef salaries Equipment depreciation Administrative wages and salaries Building costs Total cost €3,879,900 To help determine the activity rates. employees were interviewed and asked how they divided their time among the four major activities. The results of emplovee interviews at AIA are displaved below:

Answer 1

1.

	Meal preparation	Flight Related	Customer Service	Other	Total
Cooks and delivery personnel wages	$2,340,000	$624,000	0	$156,000	$3,120,000
Kitchen supplies	38,400	0	0	0	38,400
Chef salaries	85,050	48,600	97,200	12,150	243,000
Equipment depreciation	56,550	0	0	30,450	87,000
Administrative wages and salaries	0	54,375	108,750	54,375	217,500
Building cost	0	0	0	174,000	174,000
Total cost	$2,520,000	$726,975	$205,950	$426,975	$3,879,900

2.

Activity at AIA	Meal preparation 1,000,000 meals	Flight - Related 5,000 flights	Customer service 10 airlines
Cooks and delivery personnel wages	$2.34	$124.8	$0
Kitchen supplies	0.0384	0	0
Chef salaries	0.08505	9.72	9,720
Equipment depreciation	0.05655	0	0
Administrative wages and salaries	0	10.875	10,875
Building cost	0	0	0
Total cost	$2.52	$145.395	$20,595