Reference no: EM132603048

A company operates sight-seeing buses. Management has identified two cost drivers-the number of buses in operation and the number of passengers served -that it uses in its budgeting and performance reports. Data concerning the company's cost formulas appear below:

                                           Fixed Cost per Month                Cost per bus                Cost per passenger

Vehicle Operating costs           6800                                  476                              4

Advertising                            2500

Administrative costs                 5300                                    38                             1.5

Insurance                              3900

Question 1: For example, vehicle operating costs should be $6,800 per month plus $476 per bus plus $4 per passenger. The company's sales revenue should average $28 per passenger. In July, the company operated 45 buses and served a total of 3,200 passengers. How much is the company's flexible budget operating income for July?

Multiple Choice

Option 1: $48,580

Option 2: $30,370

Option 3: $28,220

Option 4: $59,230