Direct Method, Variable versus Fund Costing and Performance Evaluation 5.000 Airbome is a small sirine operating out of Boise, Idaho. Its three fights travel to Salt Lake City, Reno, and Portland. The owner of the airline wants to assess the cost of operating each Might. As part of this ment, the costs of two support departments (maintenance and baggage) must be allocated to the three fights. The two support departments that support of the lights are located in Bose (any maintenance or baggage costs at the destination airports are directly traceable to the individual flights) Budpeted and actual cata for the year are as follows for the support departments and the rights Use the rounded values for subsequent calculations. Support Centers Flights Maintenance Baggage Salt Lake City Reno Portland Budgeted data Fixed overhead $240,000 $150,000 520,000 $18,000 $30,000 Variable overhead $30,000 $64,000 $5,000 $10,000 6,000 Hours of nighttimet 2,000 4,000 2,000 Number of passengers 10.000 15.000 Actual data: Fixed overhead $225,000 $156,000 $22,000 $17.000 529,500 Variable overhead 300,000 $33,000 56,200 $11,000 $5,000 Hours of right time 1,800 4,200 2.500 Number of pengers 8,000 16,000 6.000 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, alocate the support service costs to each night, tuming that the objective to termine the cost of operating each fight Allocation ratios for fixed costs SLC Rene Portland Hours of light time 2,000 X 4,000 X 2.000 X Number of passenger 10,000 15,000 X 5,000 Variable rates: Maintenance: 8,000 X per flight hour Baggage: 30,000 X per passenger Cost Allocation SLC Reno Portland Maintenance-fixed: 60,000 120,000 60,000 Maintenance-variable: 7,500 15,000 7,500 Baggage--fixed: 49,995 75,000 25,005 Baggage-variable: 21,333 32,000 | 10,667 103,172 138,828 242,000 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: 49,765 X $ 116,118 X 69,118 x Maintenance-variable: 16,941 39,529 X 23,529 X Baggage-fixed: 41,600 X 83,200 X 31,200 X Baggage-variable: 8,800 X 17,600 X 6,600 X