Lapinsky Air Uses Two Measures of Activity, Flights and Passengers

question 276

Multiple Choice

Lapinsky 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 $31,400 per month plus $2,148 per flight plus $7 per passenger. The company expected its activity in April to be 89 flights and 261 passengers, but the actual activity was 84 flights and 260 passengers. The actual cost for plane operating costs in April was $204,810. The spending variance for plane operating costs in April would be closest to:

• A) $8,842 U
• B) $19,589 F
• C) $19,589 U
• D) $8,842 F