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Problem 7-22 Onassis Catering is a Greek company that provides passenger and crew meals to airlines operating out of two international airports in Athens and Corfu. The operations at the two airports are managed separately, and top management believes that there may be benefits to greater sharing of information between the two operations To better compare the two operations, an ABC system has been designed with the active particiation of the managers at both airports. The ABC system is based on the following activity cost pools and activity measures: Activity Cost Pool Activity Measure Meal Preparation Number of meals Flight-related activities Number of flights Customer service Number of customers Other (costs of idle capacity and organization-sustaining costs) N/A The operation at Athens International Airport (AIA) serves 1 million meals annually on 5,000 flights for 10 different airlines. (Each airline is considered one customer.) The annual cost of running the AIA airport operation, excluding only the cost of raw materials for meals, totals $3,675,000. Annual cost of the AIA operation Cooks and delivery personnel wages $3,000,000 Kitchen supplies 37,50 Chef salaries 225,000 Equipment depreciation 75,00 Administrative wages and salaries 187,500 Building costs 150,000 Total cost $3,675,000 To help determine the activity rates, employees were interviewed and asked how they divided their time among the four major activities. The results of employee interviews at AIA are displayed below: Distribution of Resource Consumption across Activities at the AIA Operation Meal Preparation Flight-Related Customer Other Total Service Cost and delivery personnel 75% 20% 10% 5% 100% wages Kitchen supplies 100% 0% 0% 0% 100% Chef salaries 30% 20% 40% 10% 100% Equipment depreciation 60% 0% 0% |40% 100% Administrative wages and 0% 20% 60% 20% 100% salaries Building costs 0% 0% 0% 100% 100% Required: 1. Perform the first-stage allocation of costs to the activity cost pools. 2. Compute the activity rates for the activity cost pools. 3. The Corfu operation has already concluded its ABC study and has reported the following activity rates: 2.48 per meal for meal preparation; 144.5 per flight for flight-related activities; and 12,000 for customer service. Comparing the activity rates for the AIA operation you computed in (2) above to the activity rates for Corfu, do you have any suggestions for the top management of Onassis Catering? Please complete this question using the textbox below. Ensure that your answer is clearly labelled for requirements 1, 2 and 3