1) ABC Airlines has determined both the fixed and variable costs per flying hour associated with flying each of the 10 different types of aircraft in their fleet. How might this type of information be useful in determining the costs associated with flying different aircraft on specific routes?

2) You are a management analyst for XYZ aircraft manufacturing company. Your company is considering either to purchase or lease manufacturing equipment. Identify, discuss, and be specific on five differential costs that might exist between the two options. You can develop any assumptions you want for either alternative, but if you do, they should be explained.

3) List and discuss three costs that are likely to be controllable by a city’s airport manager. List three costs that are likely to be uncontrollable by the manager.

4) Refer to data below. Build an Excel Spreadsheet and complete requirements 1 and 2.

Sales Revenue		$475,000.00
Work-in-process inventory, December 31		$15,000.00
Work-in-process inventory, January 1		$20,000.00
Selling and administrative expenses		$75,000.00
Income tax expenses		$45,000.00
Purchases of raw material		$90,000.00
Raw-material inventory, December 31		$12,500.00
Raw-material inventory, January 1		$20,000.00
Direct labor		$100,000.00
Utilities: plant		$20,000.00
Depreciation: plant and equipment		$30,000.00
Finished-goods inventory, December 31		$25,000.00
Finished-goods inventory, January 1		$10,000.00
Indirect material used		$5,000.00
Indirect labor		$7,500.00
Other manufacturing overhead		$40,000.00