Spraque Air Uses Two Measures of Activity, Flights and Passengers

question 216

Multiple Choice

Spraque 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 $40,520 per month plus $2,733 per flight plus $11 per passenger. The company expected its activity in June to be 71 flights and 207 passengers, but the actual activity was 70 flights and 205 passengers. The actual cost for plane operating costs in June was $239,580.
-The activity variance for plane operating costs in June would be closest to:

• A) $2,755 U
• B) $2,755 F
• C) $2,740 F
• D) $2,740 U

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