Question

# Dinham Kennel uses tenant-days as its measure of activity; an animal housed in the kennel for...

Dinham Kennel uses tenant-days as its measure of activity; an animal housed in the kennel for one day is counted as one tenant-day. During March, the kennel budgeted for 4,300 tenant-days, but its actual level of activity was 4,340 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for March:

Data used in budgeting:

 Fixed element per month Variable element per tenant-day Revenue - \$ 35.20 Wages and salaries \$ 3,200 \$ 8.20 Food and supplies 2,200 14.70 Facility expenses 8,700 3.70 Administrative expenses 7,200 0.10 Total expenses \$ 21,300 \$ 26.70

Actual results for March:

 Revenue \$ 140,230 Wages and salaries \$ 28,620 Food and supplies \$ 66,350 Facility expenses \$ 24,110 Administrative expenses \$ 7,102

The spending variance for food and supplies in March would be closest to:

#### Homework Answers

Answer #1
 Ans. Spending variance is the difference between actual food and supplies & the flexible budget of food and supplies. Flexible budget for food and supplies = Fixed expenses + (Actual activity * Variable cost per tenant day) \$2,200 + (4,340 * \$14.70) \$2,200 + \$63,798 \$65,998 Spending variance   = Actual results -   Flexible budget \$66,350 - \$65,998 \$352 Unfavorable *Increase in expenses from flexible budget to actual results =   Unfavorable. *Decrease in expenses from flexible budget to actual results =   Favorable.
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