Reference no: EM131711589

Question - Bobe 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 $51,700 per month plus $2,570 per flight plus $11 per passenger. The company expected its activity in May to be 67 flights and 247 passengers, but the actual activity was 70 flights and 246 passengers. The actual cost for plane operating costs in May was $233,406.

The plane operating costs in the flexible budget for May would be closest to:

$234,306

$226,607

$233,406

$236,355