May 15th, 2015
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Problem:12-16, 12-17, 13-23 Problem 12-16a.The costs incurred for the pilot and fuel are direct costs. Depreciation is an indirect cost.b.The allocation rate for the depreciation is determined as follows: CostBaseComputationAllocation RateDepreciationNo. of miles$5,500,000 25,000,000 =$0.22 per mile CostsAllocation RatexWeightof Base=Chicago toSan FranciscoChicago toNew YorkDepreciation$0.22x4,400=$ 968Depreciation 0.22x1,600=$352Pilot350300Fuel300150Total cost$1,618$802c.Other costs that may need to be allocated include maintenance, airport fees, utilities, training, and ground support. Problem 12-17a.Changes in the number of tents inspected will not affect the total fixed inspection cost so long as the number remains within the relevant range. Indeed, the number of tents

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