Time remaining: 1:48:55 4 Borunda Air uses two measures of activity, flights and

Question

Time remaining: 1:48:55 4 Borunda 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 $43,000 per month plus $2,919 per flight plus $8 per passenger. The company expected its activity in July to be 127 flights and 286 passengers, but the actual activity was 131 flights and 282 passengers. The actual cost for plane operating costs in July was $409,840. The activity variance for plane operating costs in July would be closest to: $6,161 F $11644 $6,161 $11644

Explanation / Answer

Budgeted cost for actual activity = 43000 + (127*2919) + (286*8)

= 43000 + 370713 + 2288 = 416001

Actual cost for plane operating = 409840

The activity variance for plane operating costs in July = 416001 - 409840 = 6161 F

Answer is $6161F

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