Answered step by step
Verified Expert Solution
Question
1 Approved Answer
A further consideration of the investment proposal by the Hotel Manager concerns the pricing of airport services: - Average direct costs are estimated to be
A further consideration of the investment proposal by the Hotel Manager concerns the pricing of airport services: - Average direct costs are estimated to be 10 per passenger (including on-board refreshments). - Total related annual overhead costs for the year are 24,000. - A total of 6,000 passengers are estimated over the year. The most popular trip is forecast to be to Bristol Airport, as this is larger than Exeter Airport. (Appendix I). An accounting-based price is to be calculated for initial discussions. Head Office has suggested a 40% mark-up on the full cost as a basis for pricing. Historically, an absorption rate basis has been used. The activity-based costing (ABC) method is under consideration by Buenos Dias plc Head Office for implementation across the chain within the next financial year. The following information has been estimated for this purpose: Requirement: Section C of your report to the Exeter hotel manager. Evaluate and advise on costing and pricing considerations of the Bristol Airport service
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started