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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 companys cost formulas appear below:

Fixed Cost per Month

Cost per Bus

Cost per Passenger

Vehicle operating costs

$

6,800

$

476

$

2.5

Advertising

$

2,500

Administrative costs

$

5,300

$

38

$

1.5

Insurance

$

3,900

For example, vehicle operating costs should be $6,800 per month plus $476 per bus plus $2.5 per passenger. The companys sales revenue should average $29 per passenger. In July, the company operated 51 buses and served a total of 3,300 passengers. How much is the companys flexible budget operating income for July?

Multiple Choice

  • $31,076

  • $56,374

  • $37,786

  • $57,914

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