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. Cost per Bus $ 476 Cost per Passenger $ 3.5 Vehicle operating costs Advertising Administrative costs Insurance Fixed Cost per Month 6,800 $ 2,500 $ 5,300 $ 3,900 $ 38 $ 1.5 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 $31 per passenger. In July, the company operated 46 buses and served a total of 3.150 passengers. How much is the company's flexible budget operating Income for July? Multiple Choice $39.756 $57,929

Answer 1

Sales	$97,650.00
Particulars	Fixed Cost	Cost Per Bus	No of Buses	Bus Cost	Cost Per Passenger	No of Passenger	Total Passanger Cost	Total Cost
	(A)	(B)	(C )	(D)= (B)*(C )	(E)	(F )	(G)= (E)*(F )	(A)+(D)+(G)
Vehicle Operating Cost	$6,800	$476	46	$21,896	$3.50	3150	$11,025.00	$39,721.00
Advertising	$2,500							$2,500.00
Administrative Costs	$5,300	$38	46	$1,748	$1.50	3150	$4,725.00	$11,773.00
Insurance	$3,900							$3,900.00
Calculation of Flexible Budget Operating Income for July
Sales		$97,650
Less: Costs
Vehicle Operating Cost		($39,721)
Advertising		($2,500)
Administrative Costs		($11,773)
Insurance		($3,900)
Net Opearting Income		$39,756	($102400-$43096-$2500-$11848-$3900)
The Correct answer is A. $39,756