Canniff Air uses two measures of activity, flights, and passengers, in the cost formulas in its budgets
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Question:
Canniff 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 $56,760 per month plus $2,626 per flight plus $9 per passenger. The company expected its activity in February to be 63 flights and 262 passengers, but the actual activity was 62 flights and 263 passengers. The actual cost for plane operating costs in February was $220,700. The plane operating costs in the planning budget for February would be closest to:
a. $224,556
b. $223,326
c. $221,939
d. $220,700
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