Question
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
Cost per Bus
Cost per Passenger
Vehicle operating costs
$
6,800
$
476
$
3.5
Advertising
$
2,500
Administrative costs
$
5,300
$
38
$
1.5
Insurance
$
3,900
For example, vehicleoperating costs should be $6,800 per month plus $476per bus plus $3.5per passenger. The company's sales revenue should average $29per passenger. In July, the company operated 53buses and served a total of 3,200 passengers. How much is the company's flexible budget operating income for July?
Multiple Choice
- $32,028
- $31,058
- $49,572
- $61,742
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