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Tcecarenko [31]
3 years ago
12

RamsayRamsay Travel offers helicopter service from suburban towns to John F. Kennedy International Airport in New York City. Eac

h of its 12 helicopters makes between 900 and 1,500 ​round-trips per year. The records indicate that a helicopter that has made 900​round-trips in the year incurs an average operating cost of ​$750 per​ round-trip, and one that has made 1,500 ​round-trips in the year incurs an average operating cost of ​$600 per​ round-trip.
1. Using the​ high-low method, estimate the linear relationship y=a + bX, where y is the total annual operating cost of a helicopter and X is the number of​ round-trips it makes to JFK airport during the year.
2. Give examples of costs that would be included in a and in b?
3. If RamsayRamsay Travel expects each helicopter to​ make, on​average, 1,200
round-trips in the coming​ year, what should its estimated operating budget for the helicopter fleet​ be?
Business
1 answer:
Mariana [72]3 years ago
5 0

Answer:

1) y = 337,500 + 375X

variable costs per trip (per helicopter) =  $375 per trip

fixed costs = $337,500

2) fixed costs (a) include depreciation expenses, licences, insurance, etc., while variable costs include fuel, salaries (if pilots are paid per flight), etc.

3)  operating budget for the whole fleet (12 helicopters) = $9,450,000

Explanation:

variable costs per trip (per helicopter) =  ($900,000 - $675,000) / (1.500 - 900) = $225,000 / 600 = $375 per trip

fixed costs = $900,000 - (1,500 x $375) = $900,000 - $562,500 = $337,500

the estimated operating budget per helicopter = $337,500 + (1,200 x $375) = $337,500 + $450,000 = $787,500

operating budget for the whole fleet (12 helicopters) = 12 x $787,500 = $9,450,000

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1. Dr Material 80000

                    Cr Accounts payable 80000

         (Purchase material on account)

2. Dr Work in process 4000

                       Cr Material   4000

        (issue material)

3. Dr Material   56000

                     Cr Accounts payable  56000

( Purchase material on account)

4. Dr Accounts payable  80000

                                    Cr Cash 80000

(Paid cash of material purchase)

5. Dr Work in process 68000

                          Cr Material  68000

( Issued material to production)

6. Dr Work in process  100000

                              Cr Wages payable  100000

    (Direct labor incurred)

7. Dr Factory overhead 106000

                  Cr Cash                  106000

( Paid cash on account of factory overhead)

8. Dr Work in process (100000*125%) 125000

              Cr Applied factory overhead             125000

( To record applied factory overhead)

9. Dr Factory overhead  50000

                             Cr Accumulated depreciation 50000

( To record depreciation on plant and equipment)

T-account

Cash                                                                             Material

Dr___________Cr__                                            __ DR ___________CR

                                                                                   148200     ---

           ---80000                                                          80000   ----    4000

          ---106000                                                            56000 ---

                                                                                                         -- 68000

Work in process                                                              Accounts payable

Dr____________Cr___                                          ___ DR ___________Cr                                                                                                        

33000 ---

4000---                                                                              80000        --  80000

68000--                                                                                               -- 56000

100000---

125000 ---

Wages payable                                                          Factory overhead

Dr ____________Cr__                                          __ Dr _____________Cr

            ---  100000                                                  106000 --

                                                                                50000 --

Applied factory overhead                                    Accumulated depreciation

Dr_____________Cr__                                          _ Dr ___________Cr_

          ---   1250000                                                                ---   50000

Finished goods                                                    Cost of goods sold

Dr_____________Cr__                                          _ Dr ___________Cr_

166000     ---                                                                         ---     263400

                ---   143200  

Material end =?  

Material (end) = 148200 +80000+56000-4000-68000=

Work in process (end) = ?

work in process  = 148200+166000-143200 =171000                                                                                

8 0
3 years ago
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