Formula Static flexible Actual budget budget (32 000 (35 000 Variance (per air-km) air-km) air-km) Passenger revenue $3.50 $112 000 $122 500 $10 500 U Less Variable costs: Fuel 0.50 17 000 17 500 500 F Aircraft maintenance 0.75 23 500 26 250 2 750 F Flight crew salaries 0.40 13 100 14 000 900 F Selling and administration 0.80 24 900 28 000 3 100 F Total variable expenses $2.45 $ 78 500 $ 85 750 $ 7 250 F Contribution margin $1.05 $ 33 500 $ 36 750 $ 3 250 U Less Fixed costs: Depreciation on aircraft $2 900 $ 2900 $ 2900 O Landing fees 900 1 000 900 100 U Supervisory salaries 9 000 8 600 9 000 400 F Selling and administrative 1 1 000 12 400 11 000 1 400 U Total fixed expenses $23 800 $ 24 900 $ 23 800 $ 1 100 U Net profit $ 8 600 $ 12 950 $ 4 350 U