Borunda Air Uses Two Measures of Activity, Flights and Passengers

Multiple Choice

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 $37,020 per month plus $2,731 per flight plus $6 per passenger. The company expected its activity in July to be 73 flights and 253 passengers, but the actual activity was 75 flights and 251 passengers. The actual cost for plane operating costs in July was $231,770. The activity variance for plane operating costs in July would be closest to:

A) $6,131 F
B) $5,450 F
C) $6,131 U
D) $5,450 U