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 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 February would be closest to: Garrison 16e Rechecks 2018-08-12 Multiple Choice $9,781 F $9,901 F $9,781 U $9,901 U

Answer 1

	Actual net operating income
	Revenue				109,080
	less:Expenses
	Wages and salaries			23,630
	Food and supplies			36,803
	Facility expense			19,380
	Administrative expense			9,166
	Total expense				88,979
	net operating income				20,101
	Flexible budget
	Revenue	(5,320*31.80)=			169,176
	total expense (21600+5320*25.80)=				158856
	net operating income				10,320
	Flexible budget
	actual -flexible
	20,101-10,320
	9,781	F	answer