Sterr Air Uses Two Measures of Activity, Flights and Passengers

Multiple Choice

Sterr 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 $49,340 per month plus $2,635 per flight plus $2 per passenger. The company expected its activity in January to be 73 flights and 191 passengers, but the actual activity was 75 flights and 193 passengers. The actual cost for plane operating costs in January was $246,440.
-The plane operating costs in the flexible budget for January would be closest to:

A) $246,440
B) $247,351
C) $248,709
D) $242,077