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Question - So a commuter bus company uses two measures of activity, routes and commuters, in the cost formulas in its budgets and performance reports. The cost formula for bus operating costs is $56,900 per month plus $2,876 per route plus $15 per commuter. The company expected its activity in November to be 87 routes and 256 commuters, but the actual activity was 95 routes and 263 commuters. The actual cost for bus operating costs in November was $305,100. What the spending variance for bus operating costs in November?
How much will income increase in percentage terms? Make sure you have read over the DOL discussion and understand the multiplier impact of changes in sales volume that occurs based on DOL.
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Outline briefly why the situation constitutes an audit risk. List and explain the component of the audit risk model affected. Indicate the key account balance(s) affected. Indicate the audit assertion(s) to be tested.
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