For this Case Study complete the four requirements below:
1. ABC Airlines has determined both the fixed and variable costs per flying hour associated with flying each of the 10 different types of aircraft in their fleet. How might this type of information be useful in determining the costs associated with flying different aircraft on specific routes?
2. You are a management analyst for XYZ aircraft manufacturing company. Your company is considering either to purchase or lease manufacturing equipment. Identify, discuss, and be specific on five differential costs that might exist between the two options. You can develop any assumptions you want for either alternative, but if you do, they should be explained.
3. List and discuss three costs that are likely to be controllable by a city's airport manager. List three costs that are likely to be uncontrollable by the manager.
4. Refer to Problem 2-43 at the end of Chapter 2. Build or use an existing Excel Spreadsheet and complete requirements 1 and 2. The spreadsheet must accompany the submission.
Reference below:
Hilton, R. W. (2014). Managerial accounting (10th ed.). New York: McGraw-Hill Irwin.
For this case study, you will demonstrate your ability to correctly calculate the problem and demonstrate creative thinking by analyzing the case and answering the questions that are intended to interpret the data.
The following data refer to Laredo Luggage Company for the year 20x2:
Sales revenue $475,000
Work-in-process inventory, December 31 15,000
Work-in-process inventory, January 1 20,000
Selling and administration expenses 75,000
Income tax expenses 45,000
Purchases of raw material 90,000
Raw-material inventory, December 31 12,500
Raw-material inventory, January 1 20,000
Direct labor 100,000
Utilities: plant 20,000
Depreciation: plant and equipment 30,000
Finished-goods inventory, December 31 25,000
Finished-goods inventory, January 1 10,000
Indirect material used 5,000
Indirect labor 7,500
Other manufacturing overhead 40,000
Required:
1. Prepare Laredo Luggage's schedule of cost of goods manufactured for the year.
2. Prepare Laredo Luggage's schedule of cost of goods sold for the year.
3. Prepare Laredo Luggage's income statement for the year.
4. Build a spreadsheet: Construct an Excel spreadsheet to solve all of the preceding requirements. Show how both cost schedules and the income statement will change if raw-material purchases amounted to $92,000 and indirect labor was $9,000.