Question 2 SkyAir is a large multi-national airline that has many responsibility centres: A. The South American division, which is responsible for operations in South America and has the authority to purchase new aircraft and add/cut routes. B. The Pilot Training group, which is responsible for training and professional development of SkyAir pilots. C. The reservations group, which is responsible for processing SkyAir reservations. D. The fuel group, which is responsible for SkyAir fueling aircraft. Required: What type of cost-centre (Cost, Revenue, Profit, Investment) should each of these be considered for evaluation purposes? Briefly justify your responses. Question 3 (continuation of Question 2) The maintenance division maintains the aircraft. Currently, the maintenance division is classified as a cost centre. From time-to-time, the maintenance division also does maintenance for other airlines, but this represents less than 1% of revenues. Should the maintenance division be a cost centre?

Question 2 SkyAir is a large multi-national airline that has many responsibility centres: A. The South American division, which is responsible for operations in South America and has the authority to purchase new aircraft and add/cut routes. B. The Pilot Training group, which is responsible for training and professional development of SkyAir pilots. C. The reservations group, which is responsible for processing SkyAir reservations. D. The fuel group, which is responsible for SkyAir fueling aircraft. Required: What type of cost-centre (Cost, Revenue, Profit, Investment) should each of these be considered for evaluation purposes? Briefly justify your responses. Question 3 (continuation of Question 2) The maintenance division maintains the aircraft. Currently, the maintenance division is classified as a cost centre. From time-to-time, the maintenance division also does maintenance for other airlines, but this represents less than 1% of revenues. Should the maintenance division be a cost centre?

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter10: Evaluating Decentralized Operations

Section: Chapter Questions

Problem 1TIF

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