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28 May, 02:07

EB7.

LO 2.2Case Airlines provides charter airline services. The fixed expenses to operate the company’s aircraft are $377,300 in January and $378,880 in February. It costs Case Airlines $0.45 per mile in variable costs. In January, Case aircraft flew a total of 385,000 miles, and in February, Case aircraft flew a total of 296,000 miles. Using this information, answer the following:

What were the total costs to operate the aircraft in January and February, respectively?

What were the total costs per mile to operate the fleet in January and February, respectively?

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Answers (1)
  1. 28 May, 02:32
    0
    (a) $550,550; $512,080

    (b) $1.43 per mile; $1.73 per mile

    Explanation:

    (a) January:

    Total cost to operate the aircraft:

    = Fixed cost + Variable cost

    = $377,300 + ($0.45 * 385,000 miles)

    = $377,300 + $173,250

    = $550,550

    February:

    Total cost to operate the aircraft:

    = Fixed cost + Variable cost

    = $378,880 + ($0.45 * 296,000 miles)

    = $378,880 + $133,200

    = $512,080

    (b)

    Total costs per mile to operate the fleet in January:

    = Total cost in January : Miles flew in January

    = $550,550 : 385,000

    = $1.43 per mile

    Total costs per mile to operate the fleet in February:

    = Total cost in February : Miles flew in February

    = $512,080 : 296,000

    = $1.73 per mile
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