Reference no: EM132657003

Central Mountain Air operates scheduled and flights to over 17 British Columbia and Alberta communities. Due to a political convention held in Vancouver, the airline added several extra flights during a two-week period. Additional cabin crews were hired on a temporary basis. However, rather than hiring additional flight attendants, the airline used its current attendants on overtime. Monica Gaines worked the following schedule on August 10. All of Gaines's flights on that day were extra flights that the airline would not normally fly.

Regular time:
2 round-trip flights between Vancouver and Ft. St. John (8 hours)
Overtime:
1 one-way flight from Vancouver to Ft. Nelson (3 hours)
Gaines earns $14 per hour plus time and a half for overtime. Fringe benefits cost the airline $4 per hour for any hour worked, regardless of whether it is a regular or overtime hour.

Required:

Question 1: Compute the direct cost of compensating Gaines for her services on the flight from Vancouver to Ft. Nelson.

Question 2: Compute the cost of Gaines' services that is an indirect cost.

Question 3: How should the cost computed in requirement (2) be treated for cost accounting purposes?

Question 4: Gaines ended her workday on August 10 in Ft. Nelson. However, her next scheduled flight departed Vancouver at 11:00 a.m. on August 11. This required Gaines to "dead-head" back to Vancouver on an early-morning flight. This means she travelled from Ft. Nelson to Vancouver as a passenger, rather than as a working flight attendant. Since the morning flight from Ft. Nelson to Vancouver was full, Gaines displaced a paying customer. The revenue lost by the airline was $87. What type of cost is the $87? To what flight, if any, is it chargeable? Why?