Hirons Air Uses Two Measures of Activity, Flights and Passengers

question 460

Multiple Choice

Hirons 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 $57,440 per month plus $2,962 per flight plus $15 per passenger. The company expected its activity in November to be 83 flights and 255 passengers, but the actual activity was 86 flights and 257 passengers. The actual cost for plane operating costs in November was $305,490. The spending variance for plane operating costs in November would be closest to:

• A) $1,621 U
• B) $10,537 U
• C) $10,537 F
• D) $1,621 F

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Definitions:

French Truffles

A highly prized type of edible fungi native to France, known for its distinctive aroma and flavor, used as a delicacy in culinary dishes.

Euros

The official currency of 19 out of the 27 European Union countries, known collectively as the Eurozone.

American Buyer

A consumer or purchasing entity located in the United States, often referenced in contexts involving international trade or market analysis.

Relative Prices

Relative prices refer to the price of one good or service compared to the price of another, essentially showing their cost relationship.