Fly Well Ltd operates the check in facilities at domestic and international terminals throughout New Zealand During March the following costs were incurred as passengers were processed by the check in department at Auckland Airport International terminal Domestic terminal Costs $ $ Managers and Supervisors salaries 18,500 29,500 Check in staff salaries 14,800 43,500 Depreciation on baggage handling equipment 31,250 58,450 Boarding passes, baggage tags and other consumables 4,500 2,300 Depreciation on computer hardware and software 8,700 31,500 Equipment insurance 1,100 2,450 Rent (allocated per square metre) 1,500 7,300 Electricity 3,120 6,250 Number of passengers processed 7,250 20,100 Required Show all your workings (i) Calculate the cost per check in at the international and domestic terminals (ii) Why does the cost per check in differ between the two terminals (iii) Do these costs provide a reliable estimate of the costs incurred to check in each passenger at the two terminals Explain your answer (Hint Reflect on the applicability of process costing)

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Sep 17, 2024

Fly Well Ltd operates the check-in facilities at domestic and international terminals throughout New Zealand. During March the following costs were incurred as passengers were

Fly Well Ltd operates the check-in facilities at domestic and international terminals throughout New Zealand. During March the following costs were incurred as passengers were processed by the check-in department at Auckland Airport:

	International terminal	Domestic terminal
Costs:	$	$
Managers and Supervisors salaries	18,500	29,500
Check-in staff salaries	14,800	43,500
Depreciation on baggage handling equipment	31,250	58,450
Boarding passes, baggage tags and other consumables	4,500	2,300
Depreciation on computer hardware and software	8,700	31,500
Equipment insurance	1,100	2,450
Rent (allocated per square metre)	1,500	7,300
Electricity	3,120	6,250

Number of passengers processed	7,250	20,100

Required: Show all your workings. (i) Calculate the cost per check-in at the international and domestic terminals. (ii) Why does the cost per check-in differ between the two terminals? (iii) Do these costs provide a reliable estimate of the costs incurred to check in each passenger at the two terminals? Explain your answer. (Hint: Reflect on the applicability of process costing).