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Alice Jones is the financial analyst at NorthJet Air Charters (NAC). She is examining the behavior of the operating costs for budgeting purposes. The operating
Alice Jones is the financial analyst at NorthJet Air Charters (NAC). She is examining the behavior of the operating costs for budgeting purposes. The operating costs consist of three types of costs: (1) Variable operating costs (such as jet fuel) at $14 per kilometer flown (2) Fixed operating costs (such as the aircrew salaries) of $100,000 per month (3) Mixed operating costs (such as aircraft maintenance). Alice has obtained the following costs for the past six months: i. ii. Kilometers Flown Month January 10,000 February 15,000 March 12,000 18,000 19,000 16,000 April May June Total Operating Costs $360,000 470,000 398,000 522,000 576,000 489,000 Required Using the high-low method, estimate a cost formula for Mixed Maintenance NAC expects to fly 17,500 kilometers in July and charges $60 per kilometre. Prepare a contribution format income statement for July
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