Managerial Accounting Question Answer 2022

Running head: MANAGERIAL ACCOUNTING
Managerial Accounting
Name of the Student:
Name of the University:
Author’s Note:

1MANAGERIAL ACCOUNTING
Table of Contents
Answer to question 1:......................................................................................................................2
Answer to question 2:......................................................................................................................3
Sub part A:...................................................................................................................................3
Sub part B:...................................................................................................................................5
Sub part C:...................................................................................................................................6
Sub part D:...................................................................................................................................6
References and bibliography:..........................................................................................................8

2MANAGERIAL ACCOUNTING
Answer to question 1:
The Flying Airlines is an Airline company operating domestic as well as international
flights. They have been analyzing their operations and planning to make certain strategic changes
in their operations. As they are facing certain issues in their operational activities and that is
leading to financial inefficiencies, they have analyzed their operations and shorted out a problem
with their loading truck in Sydney Airport. They have planned to replace the existing loading
truck with a new one. In the following parts of this report, the appraisal for the replacement
option have been done and based on the feasibility and profitability of the replacement option a
recommendation has been made. This type of replacement needs to be analyzed in terms of
marginal benefits. It means the extra benefit that can be achieved by accepting the replacement
proposal and implementing it. The Flying Airlines is considering a replacement decision of its
existing three years old loading truck in Sydney Airport. The existing loading truck has an
annual operating cost of $80,000 and a depreciation of $25,000. Therefore, to use the existing
loading truck a total of $105,000 operating expenses needs to be incurred. While the replacement
option for the existing loading truck with a new loading truck can give a better cost advantage to
the company. The new truck will be acquired for $20,000 and it will be depreciated fully in one
year. Hence, the depreciation costs for one year in the replacement option would be $20,000. In
the following part, costs related to each of the options have been computed and shown
comparatively.
Using Existing Truck:
Depreciation (100000/4) $ 25,000
Variable operating costs $ 80,000
Total Operating Costs $ 105,000