I ran into this question
Manchester Airlines is in the process of preparing a contribution margin income statement that will allow a detailed look at its variable costs and profitability of operations. Which one of the following cost combinations should be used to evaluate the variable cost per flight of the company's Boston-Las Vegas flights?
a. Flight crew salary, fuel, and engine maintenance.
b. Fuel, food service, and airport landing fees.
c. Airplane depreciation, baggage handling, and airline marketing.
d. Communication system operation, food service, and ramp personnel.
I usually have problems with qualitative questions like this. I don't know if anyone have great advice.
My ration is that the VC of a flight should be fixed for each flight take-off. Therefore, the crew salary (which should be a fixed team), fuel (the same mileage for the same route), and engine maintenance (which should be done each time before departure) should be considered.
The answer for this one is b. My argument is that food service varies depending on the amount of passengers for each flight.
Airline marketing is obviously not variable for each flight.
Airplane depreciation was explained to be not variable with flight. I disagreed as the plane should be depreciated depending on its work (here is mileage) if it flies within only 1 route, for the same distance, for the whole useful lifetime.
My answer was rejected for many understandable arguments, for example, the crew varies each flight, or maintenance here refers to non-routine maintenance.
I feel these questions are very controversial and should not be asked in the exam.
What would you think? I appreciate your advice to tackle these questions more consistently.
Thank you
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Kien Nguyen
Unemployed
Ottawa ON
Canada
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