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Bustillo Company operates sight-seeing buses. Management has identified two cost driversthe number of buses in operation and the number of passengers served -that it uses
Bustillo Company operates sight-seeing buses. Management has identified two cost driversthe 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 $ 6,800 Cost per Bus $ 476 Cost per Passenger $ 2.5 Vehicle operating costs Advertising Administrative costs Insurance $ 2,500 $ 5,300 $ 3,900 $ 38 $ 1.5 For example, vehicle operating costs should be $6,800 per month plus $476 per bus plus $2.5 per passenger. The company's sales revenue should average $29 per passenger. In July, the company operated 47 buses and served a total of 3,200 passengers. How much is the company's flexible budget operating income for July
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