Q) Assume the Division has entered into the two new market segments and that it uses a TDABC system. Calculate the gross profit for each of the four market segments and for the Division for the past year. Show calculations

Details are as follows:

In the past 12 months, Dr. Fauci has counted on a team of 1,200 highlyr trained professionals who provided a range of services, operating 24]? out of stateoftheart facilities. In order for the Division to handle both the two traditional market segments and the two new market segments, the professional staff had precisely doubled in numbers in each of the three professional categories (Engineering, Documentation, General maintenance], and the Division had also exactly: doubled its facilities and equipment overhead costs. This increase in capacityr happened before the past year, i.e. before time frame that Dr Fauci asked vour team to analvze. Each service contract represents an agreement to service jets with some or all of the services offered bv the Division. lthough the smallerjets are somewhat less complicated in terms of the degree of instrumentation, number of moving parts, etc., servicing each of them still requires a substantial amount of oversight by professional staff, and the documentation required for each jet does not differ substantiallv whether it is a large Boeing 23? or a small Cessna. On average, the annual sales information per market segment for the past full 12month year were: Total number of jets Total number of service in fleet contracts anrluaII-jir Large commercial 30D ' _ 12 Medium commercial 15D _ _ 13 Smilllarpcrate 15 _ 48 Small private 3 165 The Division had established a competitive service contract price of 51E],0{]D,D{}D per large commercial contract and $4,000,900 per medium commercial contract. The service contract price was set at 51,2SD,{}D{] per new small corporate contract and ENDED per new small private contract. Each service contract required five basic operations [activities]: 1. Administration [processing orders, handling invoices, submitting documentation to Canada Trans port Age ncv]; 2. Parts [ordering parts, materials handling, preparing and customizing parts for each contract]; 3. Maintenance (repairs, maintenance, installation of electrical devices, mechanical equipment, instrumentation panels, hardware, refurbishment]; 4. Preparation [cleaning proboarding preparation]; 5. Inspection for internal control and to meet governmental reporting requirements [preparing documentation, certication of maintenance, qualitv control]. The 1,200 highly-trained professional staff included the following 3 employee groups: 1. 600 Engineering staff [mechanical, electrical, and software enIneers} Engineering staffwere paid an annual salary of $120,000 plus an additional 25% in fringe benets [health plan, pension}; 2. 200 Documentation staff ltechnical and aeronautical professionals, professional pilots] Documentation staffwere paid an annual salary of $95,000 plus an additional 205% in fringe benets; 3. 4-00 General maintenance staff [preboarding cleaning, decontamination, stocking, fueling of aircraft} General maintenance staffwere paid and annual salary of $60,000 plus an additional 15% in fringe benets. All staff worked 100 hours per person per month lover 20 daysfmonth]. This included an average of 2 hours per person per day oftraining, quality meetings, staff meeting, break times, etc., which were not production time. All staffworked on a rotating schedule such that the Division was able to maintain its commitment to 24!? service {all dayfyea rround]; in other words, the company operated during the entire 0,?60 hours per year. The Division utilized state-ofthe-art facilities and sophisticated equipment. These included hangars, towing trucks, specialty cranes, diagnostic equipment, computers, laser sensors, acoustic sensors, fueling depots and decontamination devices, to name a few. In total, the facilities and equipment represented an annual expense of $145,000,000. The facilities opemted nonstop throughout the .,rear [for 5,150 hours]. In addition to the salaried staff, and facilities and equipment, each contract involved direct materials and direct labour lpaid hourty on a contract-bycontract basis}, which were all included in the costing, to which a markup was applied in order to determine the revenue from each contract. The direct labour served in a supporting role to the professional salaried staff. This direct labour was quite versatile, as it: was larger manual labour, taking instruction from the salaried professional staff, and so this direct labour could be rotated around the facility and from contracttocontract on an as-needed basis. At your request, Dr. Fauci hired a consulting firm to conduct some industrial engineering observation. The rm prepared the following information about each type of market segment: La [ge com me rcial se rvice contracts (in average, each service contract required $300,0m of materials [parts], and $400,000 of direct labour, and the following consumption of resources by activities: Activity consumption of resource holy; [large commercial service contract] Etgm Documentation Staff Ger-eralgzgrtenarce Administration _ 90 100 zoo Parts _ _ _ 2?5 50 100 Maintenance 15.000 100 zoo Preparation 1?.'3 . 10 Inspection 3'50 8.000 15,013} Facilities and Equipment usage was 120 hours for each large commercial contract. Medium commercial service contracts On average, each service contract required $100,000 of materials [parish and $150,000 of direct Ia hour, and the following consumption of resources Iov activities: Activity co nsurnption of resource hows [megion- commercial service contract] hit: \"0 : Documentation Staff Administration 90 90 Parts 215 50 Maintenance 010 20 Preparation _ J 90 100 Inspection 350 6,000 General Malntena nce Staff 180 mo 40 10 12,001. Facilities and Equipment usage was 100 hours for each medium commercial contm ct. Small corporate service contracts On average, each service contract required $25,000 of materials [parts], $50,000 of direct labour, and the following consumption of resources by activities: Activity co roofption of resource hows [small corporate service contract] Entfm Documentation Staff . Administration 90 _00 Parts_ _ ITS all?) Ma_int_enance 3,000 _ 40 Ereoaration 35 _ - {inspection 13 500 General Maintena nce 103+\" ' 150 1m 30 5 1,000 FacilitiE and Equipment usage was 50 hours for each small corporate contract. Small private service contracts On average, each service contract required $10,000 of materials [parts], and $15,000 of direct labour, and the following consumption of resources lav activities: Activity co mumption of resource \"94!? {small Wit? service co ntract] Engine-trim Staff Documentation Staff Administration _ 1'5 1'0 Parts _ _ _ _ 180 30 Maintenance _ 1,100 8 Preparation 35 - Inspection 15 100 General Maintena nce Staff 1&0 50 15 10 20: Facilities and Equipment usage was 10 hours for each small private contract