Groupe Air Uses Two Measures of Activity, Flights and Passengers

question 263

Multiple Choice

Groupe 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 $48,840 per month plus $2,381 per flight plus $7 per passenger. The company expected its activity in October to be 63 flights and 293 passengers, but the actual activity was 61 flights and 298 passengers. The actual cost for plane operating costs in October was $199,070. The activity variance for plane operating costs in October would be closest to:

• A) $1,824 F
• B) $1,824 U
• C) $4,727 U
• D) $4,727 F

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Definitions:

Tolerance

A person's diminished response to a drug, which occurs when the drug is used repeatedly and the body adapts to its presence.

Intoxicated

Refers to the condition of being under the influence of alcohol or drugs, which impairs cognitive and physical functions.

Psychoactive Drugs

Substances that affect the mind, mood, or other mental processes.

Neurotransmitter

Chemical messengers that transmit signals across the synaptic gaps between neurons.