Asked by Christopher Thomas on Jul 09, 2024
Verified
Bluemel 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 $43,670 per month plus $2,879 per flight plus $10 per passenger. The company expected its activity in December to be 85 flights and 281 passengers, but the actual activity was 90 flights and 278 passengers. The actual cost for plane operating costs in December was $314,740. The plane operating costs in the flexible budget for December would be closest to:
A) $308,324
B) $314,740
C) $291,195
D) $305,560
Plane Operating Costs
The expenses associated with operating an aircraft, including fuel, maintenance, crew, and depreciation.
Flights
The act of traveling by air, usually referring to the service provided by airlines.
Passengers
Individuals or customers who use transportation services such as airplanes, buses, trains, or ships for traveling from one place to another.
- Investigate the influence of fluctuations in operational levels on budgeted versus actual financial outlays.
- Ascertain the budgeted and actual expenses using a cost formula and activity information.
Verified Answer
Learning Objectives
- Investigate the influence of fluctuations in operational levels on budgeted versus actual financial outlays.
- Ascertain the budgeted and actual expenses using a cost formula and activity information.
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