Question

Canniff 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 $57,260 per month plus $2,646 per flight plus $6 per passenger. The company expected its activity in February to be 73 flights and 282 passengers, but the actual activity was 72 flights and 283 passengers. The actual cost for plane operating costs in February was $248,510. The plane operating costs in the planning budget for February would be closest to:

Answer 1

Plane operating costs in planning budget = 57,260 + (2646*73) + (6*282) = 57,260 + 193,158 + 1698 = 252,116 Comment if you face any issues