Krejci 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 $41,430 per month plus $2,419 per flight plus $6 per passenger. The company expected its activity in March to be 84 flights and 222 passengers, but the actual activity was 81 flights and 220 passengers. The actual cost for plane operating costs in March was $239,870. The plane operating costs in the planning budget for March would be closest to:
A)$245,958
B)$239,870
C)$248,754
D)$238,689

Question

Quizplus · Accepted Answer

The planning budget cost is calculated using the expected activity: $41,430 + ($2,419 * 84 flights) + ($6 * 222 passengers) = $245,958.

Krejci Air Uses Two Measures of Activity, Flights and Passengers