The service department costs are estimated for separate

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Reference no: EM13589089

Reference no: EM13589089

World Airlines has three service departments: (1) ticketing, (2) baggage handling, and (3) engine maintenance. The service department costs are estimated for separate cost pools formed by department and are allocated to two revenue-producing departments: (1) domestic flights and (2) international flights. World does not differentiate between fixed and variable costs in making allocations. The following data relate to the allocations:

	Budgeted Data
	Costs	Air Miles
Ticketing	$4,352,000
Baggage handling	$3,144,000
Engine maintenance	$4,896,000
Domestic flights		7,562,500
International flights		22,687,500

Allocate the service department costs to the revenue-producing departments using air miles as the allocation base.

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Allocated to

International

Baggage handling

Maintenance