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Canniff 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 $56,710 per month plus $2,624 per flight plus $8 per passenger. The company expected its activity in February to be 62 flights and 260 passengers, but the actual activity was 61 flights and 261 passengers. The actual cost for plane operating costs in February was $217,630. The plane operating costs in the planning budget for February would be closest to:

Multiple Choice

A. $221,478

B. $220,254

C. $218,862

D. $217,630

Respuesta :

rodolforodriguezr

Answer:

$221,478

Step-by-step explanation:

The cost formula in US$ for plane operating costs in a given month is  

C = 56,710 + 2,624*F + 8*N

Where  

F = expected number of flights in the month

N = expected number of passengers in the month

Since the company expected its activity in February to be 62 flights and 260 passengers and the budget for the plane operating costs is prepared before the actual costs are known,

it would be closest to

C = 56,710 + 2,624*62 + 8*260 = $221,478

so the right choice is A.

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