Product Costing and Decision Analysis for a Service Company Blue Star Airline provides passenger airline service, using small jets. The airline connects four major cities: Charlotte, Pittsburgh, Detroit, and San Francisco. The company expects to fly 170,000 miles during a month. The following costs are budgeted for a month: Fuel $2,120,000 788,500 Ground personnel Crew salaries Depreciation 850,000 430,000 $4,188,500 Total costs Blue Star management wishes to assign these costs to individual flights in order to gauge the profitability of its service offerings. The following activity bases were identified with the budgeted costs: Airline Cost Activity Base Number of miles flown Fuel, crew, and depreciation costs Ground personnel Number of arrivals and departures at an airport The size of the company's ground operation in each city is determined by the size of the workforce. The following monthly data are available from corporate records for each terminal operation eBook Airline Cost Fuel, crew, and depreciation costs Ground personnel Activity Base Number of miles flown Number of arrivals and departures at an airport The size of the company's ground operation in each city is determined by the size of the workforce. The following monthly data are available from corporate records for each terminal operation: Ground Personnel Cost Number of Arrivals/Departures Terminal City Charlotte Pittsburgh Detroit $256,000 320 97,500 130 150 129,000 306,000 San Francisco 340 Total $788,500 940 Three recent representative flights have been selected for the profitability study. Their chracteristics are as follows: Description Miles Flown Number of Passengers 80 Ticket Price per Passenger 5695.00 Charlotte to San Francisco Flight 101 Flight 102 Flight 103 2.000 800 Detroit to Charlotte 50 441.50 Charlotte to Pittsburgh 400 20 382.00 Miles Flown Number of Passengers Flight 101 Description Charlotte to San Francisco Detroit to Charlotte Charlotte to Pittsburgh Ticket Price per Passenger $695.00 2,000 80 Flight 102 800 50 441.50 Flight 103 400 20 382.00 Required: 1. Determine the fuel, crew, and depreciation cost per mile flown. per mile 2. Determine the cost per arrival or departure by terminal city, Charlotte $ Pittsburgh Detroit $ San Francisco 3. Use the information in (1) and (2) to construct profitability report for the three flights. Each flight has a single arrival and departure to its or and destination city pairs 3. Use the information in (1) and (2) to construct a profitability report for the three flights. Each flight has a single arrival and departu and destination city pairs. Blue Star Airline Flight Profitability Report For Three Representative Flights Flight 101 Flight 102 Flight 103 Passenger revenue Fuel, crew, and depreciation costs Ground personnel Total costs Flight operating income (loss)