(Management Accounting and Control )

Candle Light Bus Lines Ltd. runs a series of bus routes between cities across Canada. A new route, between Kenora and Thunder Bay, has been planned for next year. The sales manager has come up with a series of possible passengers that would use the route in the upcoming year.

She tells you that passengers could range between 20,000 and 40,000 per year and that each ticket would be $25 per trip. Because of the availability of buses to service the route, the estimated passengers would be in increments of 10,000.

The controller of the company provides you with the following information:

Costs per passenger per trip:

Fuel $5

Driver $4

Selling $2

Admin $1

In addition, she informs you that Facility Overhead will be $100,000 and Selling and Admin Overhead will be $50,000, regardless of the number of trips made in the year.

Instructions

a) Prepare a flexible budget for the company based on the above information for 20,000, 30,000, and 40,000 passengers.