Question

Bustillo Company operates sight-seeing buses. Management has identified two cost drivers—the number of buses in operation and the number of passengers served —that it uses in its budgeting and performance reports. Data concerning the company’s cost formulas appear below:

	Fixed Cost per Month			Cost per Bus			Cost per Passenger
Vehicle operating costs	$	6,800		$	476		$	3.5
Advertising	$	2,500
Administrative costs	$	5,300		$	38		$	1.5
Insurance	$	3,900

For example, vehicle operating costs should be $6,800 per month plus $476 per bus plus $3.5 per passenger. The company’s sales revenue should average $34 per passenger. In July, the company operated 52 buses and served a total of 3,150 passengers. How much is the company’s flexible budget operating income for July?

-64523

-60978

-46122

-31522