FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Transcribed Image Text:Bridget Youhzi works for a large firm. Her alma mater has asked her to make a
presentation to the upcoming accounting honor society's annual scholarship dinner. Her
firm supports the presentation because it hopes to recruit more excellent employees like
Bridget. The university is 194 miles from her office. In order to get to the dinner by 5:00
p.m., she will need to leave work at 1:00 p.m. She can drive her personal car and be
reimbursed $0.50 per mile. The dinner ends at 9:00 p.m. Company policy allows her to
spend the night if the return trip is four hours or more. There is a student-run inn and
conference center across the street from campus that charges $101 per night.
Instead of driving, she could catch a 3:00 p.m. flight that has a round-trip fare of $310.
Flying would require her to rent a car for $40 per day and pay an airport parking fee of
$24 for the day. The company pays a per diem of $36
incide
ls
the employee
spends at least six hours out of town. (The per diem would be for one 24-hour period for
either flying or driving.) As a manager, Bridget is responsible for recruiting within a
budget and wants to determine which is more economical.
Use the information provided to answer these questions.
A. What is the total amount of expenses Bridget would include on her expense report if
she drives?
$1
B. What is the total amount of expenses she would include on her expense report if she
flies?
$4
C. What is the relevant cost of driving?
D. What is the relevant cost of flying?
E. What is the differential cost of flying over driving?
$
F. What other factors should Bridget consider in her decision between driving and flying?
Driving allows her more flexibility to change the schedule at
a.
the last minute.
Eight hours of driving time might be put toward another
b.
work-related project.
C. Flying would still require getting to the airport about 1:30
or 2:00 p.m. to park and check in.
d. All of the above answers are correct.
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