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Determine the difference in Total Costs if you increased utilization 50 hours above the anticipated level...

Determine the difference in Total Costs if you increased utilization 50 hours above the anticipated level of 320 flight hours. Variable Cost ....$1,533 Fixed Cost .........$330,000

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Answer #1

  • Upto a certain level, the increase in total costs is solely due to the change in the variable costs.
  • The fixed costs remain the same notwithstanding the increase in flight hours.
  • Variable costs increase as the flight hours increase.
  • Alternatively, the increase in total costs = increase in flight hours × variable cost per hour = 50 hours × $1,533 = $76,650
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