Standahl Air Uses Two Measures of Activity, Flights and Passengers

Multiple Choice

Standahl 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 $39,590 per month plus $2,649 per flight plus $4 per passenger. The company expected its activity in August to be 82 flights and 294 passengers, but the actual activity was 85 flights and 297 passengers. The actual cost for plane operating costs in August was $255,690.The activity variance for plane operating costs in August would be closest to:

A) $2,294 F
B) $7,959 U
C) $7,959 F
D) $2,294 U