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A tour company uses two measures of activity, routes and passengers in its cost formulas...

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Accounting

A tour company uses two measures of activity, routes and passengers in its cost formulas used for budgeting and performance evaluation. The cost formula for tour operating costs is $56,860 per month plus $2,880 per route plus $16 per passenger. The company expected in August to perform 87 routes and serve 255 passengers, but the actual activity was 94 routes and 266 passengers. The actual tour operating costs in August was $305,100. The spending variance for tour operating costs in August would be closest to:

  • $6,400 Favorable

  • $26,736 Favorable

  • $26,736 Unfavorable

  • $20,336 Favorable

  • $6,400 Unfavorable

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