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 4,600 tenant-days, but its actual level of activity was 4,670 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 - $ 35.10
Wages and salaries $ 3,500 $ 8.50
Food and supplies 1,000 15.00
Facility expenses 9,000 4.00
Administrative expenses 7,500 0.40
Total expenses $ 21,000 $ 27.90

Actual results for March:

Revenue $ 143,330
Wages and salaries $ 28,650
Food and supplies $ 71,345
Facility expenses $ 27,130
Administrative expenses $ 7,105

The overall revenue and spending variance (i.e., the variance for net operating income in the revenue and spending variance column on the flexible budget performance report) for March would be closest to:

Garrison 16e Rechecks 2018-08-12

Multiple Choice

  • $3,020 F

  • $3,524 F

  • $3,020 U

  • $3,524 U

Homework Answers

Answer #1
Actual Flexible budget
Revenue 143330 163917 =4670*35.1
Expenses:
Wages and salaries 28650 43195 =3500+(4670*8.5)
Food and supplies 71345 71050 =1000+(4670*15)
Facility expenses 27130 27680 =9000+(4670*4)
Administrative expenses 7105 9368 =7500+(4670*0.4)
Total Expenses 134230 151293
Net operating income 9100 12624
Overall revenue and spending variance 3524 U =12624-9100
Option D $3,524 U is correct
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