World Airlines has three service departments: Ticketing, baggage handl

QUESTION

World Airlines has three service departments: Ticketing, baggage handling and engine maintenance. The service department costs are estimated for separate cost pools formed by department and are allocated to two revenue-producing departments: domestic flights and international flights. World does not
Sevice department Costs Ticketing 5,110,000 Baggage Handling 3,396,000 Engine Maintenance 7,020,000 Total costs 15,526,000 ========== Total air miles = 6,323,800 25,295,200 = 31,619,000 Cost per air mile =

,526,000 / 31,619,000 = 0.491034 Allocated to: Domestic: 6,323,800 x 0.491034 = 3,105,200 International: 25,295,200 x 0.491034 = 12,420,800

ANSWER:

CLICK REQUEST FOR  AN EXPERT SOLUTION