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THELMA Dowdye
on Dec 17, 2024

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Standahl 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 $39,590 per month plus $2,649 per flight plus $4 per passenger. The company expected its activity in August to be 82 flights and 294 passengers, but the actual activity was 85 flights and 297 passengers. The actual cost for plane operating costs in August was $255,690.The plane operating costs in the flexible budget for August would be closest to:

A) $265,943
B) $255,690
C) $267,422
D) $257,984

Passengers

Individuals who are being transported from one place to another in a vehicle, aircraft, or vessel, usually for a fare.

Plane Operating Costs

Expenses associated with operating an aircraft, which include fuel, maintenance, crew salaries, and landing fees among others.

  • Understand and calculate flexible budget variances for different cost categories.
  • Analyze the impact of activity level changes on budget variances.
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Vaishali PatilDec 20, 2024
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