4.3 Accounting in the Headlines
What are potential cost drivers for an ABC system at Virgin America?
The following table contains selected financial and other data for Virgin America for 2012.
Financial data source here.
Questions
|
Virgin America |
|
|
Selected financial data |
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For Twelve Months Ended December 31, 2012 |
|
| Partial income statement: | (000s omitted) |
| Operating revenues | $ 1,332,837 |
| Other expenses: | |
| Aircraft fuel | 537,501 |
| Aircraft rent | 221,275 |
| Wages and salaries | 176,216 |
| Aircraft maintenance | 74,459 |
| Landing fees | 110,165 |
| Sales and marketing | 107,136 |
| Guest services | 50,448 |
| Depreciation | 11,260 |
| Other | 76,110 |
| Total operating expenses | $ 1,364,570 |
| Operating income/loss | $ (31,733) |
| Selected data: | |
| Available seat miles (millions) | 12,545 |
| Departures | 56,362 |
| Aircraft in service | 51 |
| Guests (thousands) | 6,219 |
| Load factor (% of seats filled) |
79.0% |
| Fuel gallons consumed (thousands) | 161,404 |
Questions
- For each of the expenses listed in the income statement, select a cost driver from the drivers listed under “Selected data.” Provide rationale for your choice of each of the drivers.
- Are there any expenses you would group together into a single pool? Why or why not?
- How could Virgin America use these cost pools and activity-based costing information internally?
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