Question

A company that operates a frequent flyer club at an airport incurs the following operating costs: receptionist and supervisory salaries; catering; terminal depreciation based on square footage; airport fees calculated as a % of club revenue; and allocated corporate administrative overhead. If the conpany is considering whether to close the club and expand the seating area for all passengers, which of the operating costs would the company classify as unavoidable?
A. Terminal depreciation based on square footage.
B. Airport fees calculated as a % of club revenue.
C. Allocated company administrative overhead.
D. Terminal depreciation based on square footage and allocated company administrative overhead.
E. None of the answers is correct.

Answer 1

Answer:

Terminal depreciation based on square footage ( A )

Explanation:

The operating costs that the company will classify as unavoidable would be the Terminal depreciation based on square footage. this is because the terminal depreciation of the club is unavoidable whether the club is closed or opened. because the terminal depreciation is based on square footage and the coat of operating that space either as a club or expanding the seating area is unavoidable for the company,