Hirons Air uses two measures of activity, flights and passengers, in the cost fo

Q: Hirons Air uses two measures of activity, flights and passengers, in the cost fo

Answer: The spending variance =$1510 F Working notes for the above answer is as under Actual result 318,250 Less: Flexible Budget 319760 (59300+ ( 3160*81 )+( 18*250) ) Spending variance(319760-318250) 1510 F Actual result 318,250 Less: Flexible Budget 319760 (59300+ ( 3160*81 )+( 18*250) ) Spending variance(319760-318250) 1510 F

ID: 2579610 • Letter: H

Question

Hirons Air 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 $59,300 per month plus $3,160 per flight plus $18 per passenger. The company expected its activity in November to be 81 flights and 250 passengers, but the actual activity was 84 flights and 252 passengers. The actual cost for plane operating costs in November was $318,250. The spending variance for plane operating costs in November would be closest to: Multiple Choice $1,510 U $11,026 U $11,026 F

Explanation / Answer

Answer:

The spending variance =$1510 F
Working notes for the above answer is as under

Actual result

318,250

Less:

Flexible Budget

319760

(59300+ ( 3160*81 )+( 18*250) )

Spending variance(319760-318250)

1510 F