Jarmon Airlines is a small airline that occasionally carries
Not what you're looking for?
Jarmon Airlines is a small airline that occasionally carries overload shipments for the overnight delivery company Never-Fail is a multimillion-dollar company started by Peter Never immediately after he failed to finish his first accounting course. The company's motto is "We Never-Fail to Deliver Your Package on Time." When Never-Fail has more freight than it can deliver, it pays Jarmon to carry the excess. Jarmon contracts with independent pilots to fly its planes on a per trip basis. Jarmon recently purchased an airplane that costs the company $24,000.000. The plane has an estimated useful life of 100,000.000 miles and a zero salvage value. During the first week in January, Jarmon flew two trips. The first trip was a round trip flight from Chicago to San Francisco, for which Jarmon paid $500 for the pilot and $350 fuel. The second Flight was a round trip between Chicago and New York is 1,600 miles.
Required
a) Identify the direct and indirect cost that Jarmon incurs for each trip.
b) Determine the total cost of each trip.
c) In addition to depreciation, identify three other indirect costs that may need to be allocated to determine the cost of each trip.
Purchase this Solution
Solution Summary
Jarmon Airlines is a small airline that occasionally carries overload shipments for the overnight delivery company Never-Fail is a multimillion-dollar company started by Peter Never immediately after he failed to finish his first accounting course. The company's motto is "We Never-Fail to Deliver Your Package on Time." When Never-Fail has more freight than it can deliver, it pays Jarmon to carry the excess. Jarmon contracts with independent pilots to fly its planes on a per trip basis. Jarmon recently purchased an airplane that costs the company $24,000.000. The plane has an estimated useful life of 100,000.000 miles and a zero salvage value. During the first week in January, Jarmon flew two trips. The first trip was a round trip flight from Chicago to San Francisco, for which Jarmon paid $500 for the pilot and $350 fuel. The second Flight was a round trip between Chicago and New York is 1,600 miles.
Required
a) Identify the direct and indirect cost that Jarmon incurs for each trip.
b) Determine the total cost of each trip.
c) In addition to depreciation, identify three other indirect costs that may need to be allocated to determine the cost of each trip.
Solution Preview
Jarmon Airlines is a small airline that occasionally carries overload shipments for the overnight delivery company Never-Fail is a multimillion-dollar company started by Peter Never immediately after he failed to finish his first accounting course. The company's motto is "We Never-Fail to Deliver Your Package on Time." When Never-Fail has more freight than it can deliver, it pays Jarmon to carry the excess. Jarmon contracts with independent pilots to fly its planes on a per trip basis. Jarmon recently purchased an airplane that costs the company $24,000.000. The plane has an estimated useful life of ...
Purchase this Solution
Free BrainMass Quizzes
Income Streams
In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.
Business Ethics Awareness Strategy
This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.
Organizational Behavior (OB)
The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.
Academic Reading and Writing: Critical Thinking
Importance of Critical Thinking
Paradigms and Frameworks of Management Research
This quiz evaluates your understanding of the paradigm-based and epistimological frameworks of research. It is intended for advanced students.