Sterr Air Uses Two Measures of Activity, Flights and Passengers

question 4

Multiple Choice

Sterr 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 $49,340 per month plus $2,635 per flight plus $2 per passenger. The company expected its activity in January to be 73 flights and 191 passengers, but the actual activity was 75 flights and 193 passengers. The actual cost for plane operating costs in January was $246,440.
-The plane operating costs in the flexible budget for January would be closest to:

• A)$246,440
• B)$247,351
• C)$248,709
• D)$242,077

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Definitions:

Decision Making

The cognitive process of selecting a course of action from among multiple alternatives, typically involving an assessment of risks and benefits.

Relevant Information

Information that is applicable and significant to the decision-making process, typically impacting outcomes or actions.

Periphery

An area that is on the edge or outskirts of a main region, often referred to in economic, political, or geographical contexts.

Decision Making

The cognitive process of selecting a course of action from multiple alternatives to achieve a specific goal.