Reference no: EM132481293

Point 1: Baird Airlines is a small airline that occasionally carries overload shipments for the overnight delivery company Never-Fail, Inc. Never-Fail is a multimillion-dollar company started by Wes Never immediately after he failed to finish his first accounting course. The company's motto is "We Never-Fail to Deliver Your Package on Time." When Never-Fail has more freight than it can deliver, it pays Baird to carry the excess. Baird contracts with independent pilots to fly its planes on a per-trip basis. Baird recently purchased an airplane that cost the company $4,750,000. The plane has an estimated useful life of 25,000,000 miles and a zero salvage value. During the first week in January, Baird flew two trips. The first trip was a round-trip flight from Chicago to San Francisco, for which Baird paid $280 for the pilot and $230 for fuel. The second flight was a round trip from Chicago to New York. For this trip, it paid $230 for the pilot and $115 for fuel. The round trip between Chicago and San Francisco is approximately 5,000 miles and the round trip between Chicago and New York is 1,200 miles.

Required

Question A. Select if the costs are direct or indirect.

Question B. Determine the total cost of each trip.