This week we are learning about cost analysis models and in this discussion assignment we are looking at fixed, variable, and mixed costs for three companies that we have chosen. Variable costs are production costs that fluctuate with productivity, fixed costs are those costs that remain the same and is typically unaffected by changes in productivity and mixed costs are those costs that are made up of both a fixed and variable element (Holtzman, 2013). I used the word typically when describing fixed costs because these costs have a maximum level of productivity they can sustain before needing to invest more. I've chosen three companies to evaluate their possible fixed and variable costs. They are American Airlines Inc., Best Buy, and The Ferrero Group. I will look at a major component of each company's …show more content…
I will first discuss American Airlines Group Inc., an American organization that provides passenger airline services. The company operates both American Airlines and American Eagle offering an average of 6700 flights daily to over 350 destinations combined (American Airlines, 2017). The company sells seats aboard their aircrafts to any particular destination that a person requires that is listed. I will look specifically at selling seats on American Airlines' flights. I suspect that company would used activity based costing to determine the total cost of operating each flight and divide total calculate unit costs or cost per seat. There are different classes onboard most aircraft which offer various amenities such as extra legroom or extra comfortable seats so each class has a specific cost associated with it. The fixed costs for American Airlines would include salaries for cockpit crew, flight attendants, baggage handlers and other full time staff