Answer:
The spending variance for plane operating costs is closest to $282,394
Explanation:
The spending variance is the difference between the budgeted amount for an expense to be made and the actual amount that was spent on the expense. It is said to be favorable when the budgeted amount is less that the amount finally spent, and unfavorable when the budgeted amount is less than the actual amount. To solve this, we will categorize the entries into budgeted amount and actual amount, find their respective sums, and find the difference between them, this will form the spending variance. It is shown below:
cost per flight = $3,072
cost per passenger = $14
Budgeted amount
Plane operating cost = $ 58,190
cost of 88 flights = 88 × 3072 = $ 270,336
cost of 262 passengers = 262 × 14 = $ 3,668
Total budgeted cost = $ 332,194
Actual Amount
Plane operating cost = $ 331,340
cost of 91 planes = 91 × 3072 = $ 279,552
cost of 264 passengers = 264 × 14 = $ 3,696
Total Actual Cost = $ 614,588
Cost Variance = Total actual cost - Total budgeted cost
= 614,588 - 332,194 =$282,394. The cost variance is unfavorable because the actual cost was more than the budgeted cost
