What are potential cost drivers for an ABC system at Virgin America?
The following table contains selected financial and other data for Virgin America for 2012.
Virgin America |
|
Selected financial data |
|
For Twelve Months Ended December 31, 2012 |
|
Partial income statement: | (000s omitted) |
Operating revenues | $ 1,332,837 |
Other expenses: | |
Aircraft fuel | 537,501 |
Aircraft rent | 221,275 |
Wages and salaries | 176,216 |
Aircraft maintenance | 74,459 |
Landing fees | 110,165 |
Sales and marketing | 107,136 |
Guest services | 50,448 |
Depreciation | 11,260 |
Other | 76,110 |
Total operating expenses | $ 1,364,570 |
Operating income/loss | $ (31,733) |
Selected data: | |
Available seat miles (millions) | 12,545 |
Departures | 56,362 |
Aircraft in service | 51 |
Guests (thousands) | 6,219 |
Load factor (% of seats filled) |
79.0% |
Fuel gallons consumed (thousands) | 161,404 |
Financial data source here.
Questions
- For each of the expenses listed in the income statement, select a cost driver from the drivers listed under “Selected data.” Provide rationale for your choice of each of the drivers.
- Are there any expenses you would group together into a single pool? Why or why not?
- How could Virgin America use these cost pools and activity-based costing information internally?
Candela Citations
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- What are potential cost drivers for an ABC system at Virgin America?. Authored by: Dr. Wendy Tietz, CPA, CMA, CGMA. Located at: http://www.accountingintheheadlines.com. License: CC BY-NC: Attribution-NonCommercial