Question

Paulis 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 February, the kennel budgeted for 5,300 tenant-days, but its actual level of activity was 5,320 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for February: Data used in budgeting: Fixed element per month Variable element per tenant-day Revenue - $ 31.80 Wages and salaries $ 4,300 $ 7.80 Food and supplies 900 12.60 Facility expenses 8,700 4.80 Administrative expenses 7,700 0.60 Total expenses $ 21,600 $ 25.80 Actual results for February: Revenue $ 109,080 Wages and salaries $ 23,630 Food and supplies $ 36,803 Facility expenses $ 19,380 Administrative expenses $ 9,166 The net operating income in the flexible budget for February would be closest to:

Multiple Choice

• $20,007

• $20,101

• $10,320

• $10,200

Answer 1