Canniff Air Uses Two Measures of Activity, Flights and Passengers

question 372

Multiple Choice

Canniff 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 $56,560 per month plus $2,618 per flight plus $5 per passenger. The company expected its activity in February to be 63 flights and 254 passengers, but the actual activity was 62 flights and 255 passengers. The actual cost for plane operating costs in February was $218,820. The plane operating costs in the planning budget for February would be closest to:

• A) $222,764
• B) $222,349
• C) $220,151
• D) $218,820

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