Direct Method, Variable versus Fixed Costing and Performance Evaluation Airborne is a small airline operating out of Boise, Idaho. Its three flights travel to Salt Lake City, Reno, and Portland. The owner of the airline wants to assess the full cost of operating each flight. As part of this assessment, the costs of two support departments (maintenance and baggage) must be allocated to the three flights. The two support departments that support all three flights are located in Boise (any maintenance or baggage costs at the destination airports are directly tractable to the Individual flights). Budgeted and actual data for the year are as follows for the support departments and the three flights: Use the rounded values for subsequent calculations. Support Centers Flights Maintenance Baggage Salt Lake City Budgeted data: Reno Portland Fixed overhead $240,000 $150,000 $20,000 $18,000 $30,000 $30,000 $64,000 $5,000 $10,000 6,000 2,000 4,000 2,000 10,000 15,000 5.000 Variable overhead Hours of light time Number of passengers Actual data: Fixed overhead Variable overhead Hours of flight time $235,000 $156,000 $22.000 $17.000 $29.500 $80,000 $33,000 $6,200 $11.000 $5.800 1,800 1.200 2.500 3.000 16,000 6,000 Number of passengers Normal activity levels MOOTTI TODO /O 6,000 Number of passengers 8,000 16,000 Normal activity levels. Round all allocation ratios and variable rates to four significant digits. Round all allocated amounts to the nearest dollar Required: 1. Using the direct method, allocate the support service costs to each flight, assuming that the objective is to determine the cost of operating each flight. Allocation ratios for fixed costs SLC Reno Portland Hours of flight time 2,000 X 4,000 X 2,000 X Number of 10,000 X 15,000 X 5,000 X passengers Variable rates: Maintenance: 3.75 per flight hour 2.13 x per passenger Baggage: Cost Allocation Cost Allocation SLC Reno Portland Maintenance- fixed: 60,000 120,000 60,000 Maintenance- variable: 7,500 15,000 7,500 50,000 X 75,000 25,000 x Baggage-fixed: Baggage-variable: 21,333 32,000 10,667 $ 103,167 X 138,833 X 242,000 2. Using the direct method, allocate the support service costs to each flight, assuming that the objective is to evaluate performance. SLC Reno Portland Maintenance- fixed: 54,000 X 126,000 75,000 X $ $ Maintenance variable: Baggage-fixed: Baggage-variable: Previou variable: Baggage--fixed: 50,000 x 75,000 25,000 x Baggage--variable: 21,333 32,000 10,667 $ $ 138,833 X $ 103,167 X 242,000 2. Using the direct method, allocate the support service costs to each flight, assuming that the objective is to ex SLC Reno Portland $ 54,000 x $ 126,000 X $ 75,000 x Maintenance- fixed: Maintenance variable: Baggage--fixed: Baggage-variable