As an analyst at Delta Airlines, you are asked to help the operations staff. Operations has identified a new method of loading baggage that is expected to result in a 40 percent reduction in labor time but no changes in any other costs. The current labor cost to load bags is $5 per bag. Other costs are $4 per bag. Required: a-1 What differential costs should the operations staff consider for the decision to use the new method next year? a-2. What would be the cost savings per bag using it? How would management use the information in requirement (a) and any other appropriate information to proceed with the contemplated use of the new baggage loading method? Complete this question by entering your answers in the tabs below. Tab Req A1 Tab Reg A2 Tab Reg B Reg A1 What differential costs should the operations staff consider for the decision to use the new method next year? Differential cost _______________ Reg A2 What would be the cost savings per bag using it? (Round your answer to 2 decimal places.) Cost savings per bag ____________ Reg B How would management use the information in requirement (a) and any other appropriate information to proceed with the contemplated use of the new baggage loading method? ___ Differential costs would not play a significant role in management’s decision. ___ Management would use the information. But would also want to know the effect on quality. ___ management would make their decision based strictly on the differential costs.
As an analyst at Delta Airlines, you are asked to help the operations staff. Operations has identified a new method of loading baggage that is expected to result in a 40 percent reduction in labor time but no changes in any other costs. The current labor cost to load bags is $5 per bag. Other costs are $4 per bag.
Required:
a-1 What differential costs should the operations staff consider for the decision to use the new method next year?
a-2. What would be the cost savings per bag using it?
- How would management use the information in requirement (a) and any other appropriate information to proceed with the contemplated use of the new baggage loading method?
Complete this question by entering your answers in the tabs below.
Tab Req A1 Tab Reg A2 Tab Reg B
Reg A1
What differential costs should the operations staff consider for the decision to use the new method next year?
Differential cost _______________
Reg A2
What would be the cost savings per bag using it? (Round your answer to 2 decimal places.)
Cost savings per bag ____________
Reg B
How would management use the information in requirement (a) and any other appropriate information to proceed with the contemplated use of the new baggage loading method?
___ Differential costs would not play a significant role in management’s decision.
___ Management would use the information. But would also want to know the effect on quality.
___ management would make their decision based strictly on the differential costs.
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