Mr. Smith had recently flown into Chicago on a commercial airline for a two-day business trip. While there, he learned that his companys private airplane had flown in the day before and would leave on the same day that he was scheduled to leave. Mr. Smith immediately cashed in his $400 commercial airline ticket and flew back on the companys jet. He flew home feeling pretty good about saving his company the $400 fare.

Two weeks later, however, his boss asked him why the department had been cross-charged $625 for his return trip. The $625 amount is based on the companys estimation on the total jet operating costs of $6,250,000 and the total trips of 10,000. Mr. Smith explained that the companys jet was flying back regardless, and there were empty seats. Mr. Smiths attempt to save his company $400 ended up costing his department $625.

Now, Mr. Smith is at JFK airport in New York. His companys jet is sitting on the runway with a number of empty seats and ready to take off for the very same destination. Yet there was no way Mr. Smith is going to fly on that jet.

Required:

Adding the reasons why in answering each question below.

A. Why is that the company charges for the use of jet, even though it is used for company's business?

What will happen if the company does not charge for the use of the jet?

B. What is the problem here?

C. Was Mr. Smith's action the best decision for his department?

D. Was Mr. Smith's action the best decision for for the company?

E. If there are many disgruntled employees like Mr. Smith, what will happen to the demand for the jet use?

F. What will happen to the charge of using it?