Zylka Air uses two measures of activity, flights and passengers, in the cost for

Question

Zylka 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 $47,400 per month plus $2,337 per flight plus $3 per passenger. The company expected its activity in April to be 67 flights and 263 passengers, but the actual activity was 62 flights and 267 passengers. The actual cost for plane operating costs in April was $189,760. The plane operating costs in the planning budget for April would be closest to:
A) $189,760
B) $193,095
C) $204,768
D) $205,063

Explanation / Answer

Planned Budget = 47,400 + 2,337 * 67 + 3 * 263
Planned Budget = $204,768

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