**Franklin Airlines: Cost Calculation for Overnight Delivery Services**Franklin Airlines is a small airline that occasionally carries oversized shipments for the overnight delivery company Never-Fail, Inc. The airline's motto is "We Never-Fail to Deliver Your Package on Time." The company is assessing if the price it charges to Never-Fail is sufficient to cover costs. The pricing plan includes two cases where flights are purchased on an empty seat basis with pilots available on standby.- **Case 1**: In January, Franklin had 2,450 round-trip flights from Chicago to New York, which costs $340 per flight. Additionally, Franklin paid $290 per flight to a second carrier. The round trip between Chicago and New York is 1,400 miles.- **Case 2**: Franklin also evaluated 2,300 round-trip flights from Chicago to San Francisco, costing $533 each. The second carrier charged Franklin $425 per flight. The round trip between Chicago and San Francisco is approximately 4,500 miles.**Objective:**1. **Classify Costs**: Select whether the costs mentioned below are direct or indirect.2. **Calculate Costs**: Determine the total cost of each trip. *Note: Do not round intermediate calculations*.Please complete the questions by entering your answers in the tabs provided.![Table](https://example.com/table_image)- **Required A**: Specify the costs for different actions.- **Required B**: Calculate overall costs from Chicago to New York and Chicago to San Francisco.*Note: This exercise aims to teach cost analysis and calculation in airline operations concerning oversized shipment delivery.***End of Content** **Franklin Airlines Case Study**Franklin Airlines is a small airline that occasionally carries overloaded shipments for the overnight delivery company Never-Fail Inc. The delivery company’s motto is “We Never Fail to Deliver Your Package on Time!” The airline is paid only when Never-Fail has more freight than it can handle itself. It pays Franklin Airlines twice the direct operating costs of the flight in excess freight. During the last week in January, Franklin flew two trips, and a representative from Never-Fail filled out the plane. Franklin Airlines received $5,200 in payments for these flights. In January, Franklin flew three trips that used up all 3,800 miles, and another 540 miles were used for flights to and from Chicago. The plane has an average value of $503,000 and a zero salvage value. Franklin Airlines estimates useful life is 24,300 trips, each of 450 miles. Required:a. Select if the costs mentioned below are direct or indirect.b. Determine the total cost of each trip.**Cost Details:**- The first trip was a round trip flight from Chicago to New York. It paid $290 for the pilot and $145 for fuel. The second flight was a round trip between Chicago and San Francisco. The round trip between Chicago and New York is approximately 1,400 miles and the round trip between Chicago and San Francisco is approximately 4,500 miles.**Instructions:**Complete this question by entering your answers in the table below.| Required A | Required B ||------------|------------|| Pilot | || Fuel | || Depreciation | |*Note: Determine if the costs for the pilot and fuel are direct or indirect, and calculate the total cost including depreciation for each trip.*(Note: There is a table provided to fill in determinations and calculations based on the analysis of direct or indirect costs and total costs per trip, considering depreciation.)

Direct costs are those costs which are directly related and associated with the production of a unit…

Answered: Franklin Airlines is a small airline…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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