Farver Air Uses Two Measures of Activity,flights and Passengers,in the Cost

question 69

Multiple Choice

Farver 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 $44,420 per month plus $2,008 per flight plus $1 per passenger.The company expected its activity in May to be 80 flights and 281 passengers,but the actual activity was 81 flights and 277 passengers.The actual cost for plane operating costs in May was $199,650.The spending variance for plane operating costs in May would be closest to:

• A)$5,691 F
• B)$7,695 U
• C)$7,695 F
• D)$5,691 U

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Definitions:

Supplier Selection

The process of identifying, evaluating, and contracting with vendors or suppliers to acquire goods and services for business operations.

Financial Health

A measure of the financial stability and well-being of an entity, often evaluated through metrics like liquidity, solvency, and profitability.

Item Procurement Importance Quadrant

A strategic framework used to categorize procurement items based on their importance and impact on the company's business operations and strategies.

Low Risk

Situations or decisions that are associated with minimal potential for loss, damage, or negative outcomes.