Question

Hirons 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 $57,740 per month plus $3,006 per flight plus $17 per passenger. The company expected its activity in November to be 85 flights and 257 passengers, but the actual activity was 88 flights and 259 passengers. The actual cost for plane operating costs in November was $315,650. The spending variance for plane operating costs in November would be closest to:

Answer 1

$10,721

Step-by-step explanation:

Particulars Amount

Flexible budget ($57,440+($3,006*88)+($17*259)] $326,371

Actual results $315,650

Spending variance $10,721

Thus, the spending variance for plane operating costs in November would be $10,721.