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Bustillo Company operates sight-seeing buses. Management has identified two cost drivers-the 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 4
Advertising 2, 500
Administrative costs 5,300 38 1.5
Insurance 3,900
Question 1: For example, vehicle operating costs should be $6,800 per month plus $476 per bus plus $4 per passenger. The company's sales revenue should average $34 per passenger. In July, the company operated 52 buses and served a total of 3,250 passengers. How much is the company's flexible budget operating income for July?
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