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Part B Fly Well Ltd operates the check-in facilities at domestic and international terminals throughout New Zealand. During March the following costs were incurred as
Part B 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 Domestic terminal 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. (1) Calculate the cost per check-in at the international and domestic terminals. (2 marks) (ii) Why does the cost per check-in differ between the two terminals? (4 marks) (ii) 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). (4 marks)
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