Question

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 $59,300 per month plus $3160 per flight plus $18 per passenger. The company expected its activity in November to be 81 flights and 250 passengers, but the actual activity was 84 flights and 252 passengers. The actual cost for plane operating costs in November was $318,250. The spending variance for plane operating costs in November would be closest to:

Answer 1

$11,026 Favorable

Step-by-step explanation:

The computation of the spending variance for plane operating costs in November is shown below:

= Budgeted cost - Actual cost

= [(84 × $3,160) + (252 × $18) + $593,00] - $318,250

= $329,276 - $318,250

= $11,026 Favorable