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The Amtrak operates scheduled coach bus services from Baltimores BWI Airport to Washingtons Reagan National Airport and Washington Dulles Airport. A common scheduling service center at BWI Airport is responsible for ticketing and customer service for both routes. The service center is regularly staffed to service traffic of 2400 passengers per week: two-thirds for Dulles passengers and the balance for Reagan National passengers. The costs of this service center are $7200 per week normally, but they are higher in weeks when additional help is required to service higher traffic levels. The service center costs and number of passengers serviced during the five weeks of May follow:

Week Cost Dulles Passengers Reagan Passengers

1 $7200 1600 800

2 7200 1500 900

3 7600 1650 800

4 7800 1700 850

5 7200 1700 700

Assume that each question is independent:

a. Design 3 methods of allocating the service center charges (each week) to the Dulles Airport service and to the Reagan National Airport service. One of the methods you design should best reflect the factors that cause the costs to be incurred (in other words, should reflect cause and effect). Allocate the charges each week to the Dulles Service and to the Reagan National service using each of your 3 methods. Show your answers (with appropriate calculations also shown).

b. Refer to the original data and the data in the table. Suppose that the $7200 per week normal costs consists of $4,800 in Budgeted fixed costs and $1 per passenger as the Budgeted variable cost rate. How would you allocate charges to Dulles and Reagan each week so that your allocation best reflects causation? Assume that the costs in the table above are the actually incurred costs. Additionally, assume that various operating inefficiencies at the BWI scheduling service center resulted in costs exceeding budgeted costs for a given level of volume in some weeks.