Burchill Consultants is a global consulting firm. The firm has a travel policy that reimburses employees for the "ordinary and necessary" costs of business travel and reimburses business-class airfare for international and "long" domestic flights. Associates at the firm often mix a business trip with pleasure by either extending the time at the destination or traveling from the business destination to a nearby resort or other personal destination. When this happens, an allocation must be made between the business and personal portions of the trip, so that only the business portion is reimbursed. However, the travel policy is unclear on the allocation method to follow. Consider this example. An employee obtained a business-class ticket for $8,747 and traveled the following itinerary. From Los Angeles Singapore Sydney To Miles One-way Regular Fare Singapore Sydney 8,960 Los Angeles 4,098 7,678 $ 3,586 2,340 3,808 Purpose Business Personal Return On the date of the flights between Los Angeles and Singapore (and return), a restricted round-trip business-class fare of $4,228 was available. Required: a. Compute the business portion of the airfare according to each of the following independent scenarios: 1. Based on the maximum reimbursement for the employee. 2. Based on the minimum cost to the company. 1. Business portion of the airfare 2. Business portion of the airfare
Burchill Consultants is a global consulting firm. The firm has a travel policy that reimburses employees for the "ordinary and necessary" costs of business travel and reimburses business-class airfare for international and "long" domestic flights. Associates at the firm often mix a business trip with pleasure by either extending the time at the destination or traveling from the business destination to a nearby resort or other personal destination. When this happens, an allocation must be made between the business and personal portions of the trip, so that only the business portion is reimbursed. However, the travel policy is unclear on the allocation method to follow. Consider this example. An employee obtained a business-class ticket for $8,747 and traveled the following itinerary. From Los Angeles Singapore Sydney To Miles One-way Regular Fare Singapore Sydney 8,960 Los Angeles 4,098 7,678 $ 3,586 2,340 3,808 Purpose Business Personal Return On the date of the flights between Los Angeles and Singapore (and return), a restricted round-trip business-class fare of $4,228 was available. Required: a. Compute the business portion of the airfare according to each of the following independent scenarios: 1. Based on the maximum reimbursement for the employee. 2. Based on the minimum cost to the company. 1. Business portion of the airfare 2. Business portion of the airfare
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Burchill Consultants is a global consulting firm. The firm has a travel policy that reimburses employees for the "ordinary and necessary"
costs of business travel and reimburses business-class airfare for international and "long" domestic flights. Associates at the firm often
mix a business trip with pleasure by either extending the time at the destination or traveling from the business destination to a nearby
resort or other personal destination. When this happens, an allocation must be made between the business and personal portions of
the trip, so that only the business portion is reimbursed. However, the travel policy is unclear on the allocation method to follow.
Consider this example. An employee obtained a business-class ticket for $8,747 and traveled the following itinerary.
From
Los Angeles
Singapore
Sydney
To
Miles
One-way
Regular Fare
Singapore
Sydney
8,960
Los Angeles
4,098
7,678
$ 3,586
2,340
3,808
Purpose
Business
Personal
Return
On the date of the flights between Los Angeles and Singapore (and return), a restricted round-trip business-class fare of $4,228 was
available.
Required:
a. Compute the business portion of the airfare according to each of the following independent scenarios:
1. Based on the maximum reimbursement for the employee.
2. Based on the minimum cost to the company.
1. Business portion of the airfare
2. Business portion of the airfare
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