#21 Dangerous Airlines uses two measures of activity, flights and passengers, in
ID: 2484660 • Letter: #
Question
#21
Dangerous Airlines uses two measures of activity, flights and passengers, in the cost formulas in its budgets and performance reports. The cost formula for plane operating costs is $40,640 per month plus $2,746 per flight plus $11 per passenger. The company expected its activity in October to be 67 flights and 209 passengers, but the actual activity was 65 flights and 207 passengers. The actual cost for plane operating costs in October was $240,000. The plane operating costs in the planning budget for October would be closest to:
a. $226,899
b. $226,921
c. $225,357
d. $240,000
Explanation / Answer
Given below are the Budget rates
The plane operating costs in the planning budget for October would be Fixed Cost and the cost for Planned activities which will can be calculaed by mulyiplying flights & Passengers by respective rate and add the fixed cost to it
b. $226,921
Per flight variable Cost at budgeted Rate 2746 Per Passenger variable Cost at Budgeted Rate 11 Fixed Cost budgeted 40,640Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.