Question

Changing the Cost Formula for a Month to the Cost Formula for a Year During the past vear, the high and low use of three different resources for Fly High Airfines occurred in July and April. The resources are airplane depreciation, fuel, and airplane maintenance. The number of airplane flight hours is the driver. The total costs of the three resources and the related number of airplane flight hours are as follows: Airplane Flight Resource Hours Total Cost Airplane depreciation: High 44,000 $ 18,200,000 Low 28,000 $ 18,200,000 Fuel: High 44,000 445,896,000 Low 28,000 283,752,000 Airplane maintenance: High 44,000 15,912,000 Low 28,000 12,048,000 Required: If required, round calculations and answers to nearest dollar 1. Develop an annual cost formula for airplane depreciation. Total annual cost of airplane depreciation- Check Hy Work 5 more Check My Work uses remaining Next Submit Assignment for Grading Emal Instructor Save and Exit All work saved. MacBook Pro detete N0 6 K JO н return 00

Answer 1

1) Develop an annual cost formula for airplane depreciation

Total annual cost of airplane depreciation= 12*$18200000

As the airplane depreciation remains same irrespective of the airplane flight hours, that means airplane depreciation is a fixed costs

Develop an annual cost formula for fuel

Fuel variable cost= $445896000/44000= $10134 per flight hour

Total annual cost of fuel= $10134*Annual number of airplane flight hours

Develop an annual cost formula for airplane depreciation

Change in total cost= $15912000-12048000= $3864000

Change in airplane flight hours= 44000-28000= 16000 hours

Variable cost per unit= Change in total cost/Change in airplane flight hours

= $3864000/16000= $242 per flight hour

Fixed cost= Total cost-Variable cost

= $15912000-(44000*$242 )= $5264000

Total annual cost of airplane maintenance= (12*$5264000)+($242*Annual number of airplane flight hours)

2)

Total annual cost of airplane depreciation (12*$18200000)	$218400000
Total annual cost of fuel ($10134*486000)	$4925124000
Total annual cost of airplane maintenance (12*$5264000+$242*486000)	$180780000