Question

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

Ordway 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 June, the kennel budgeted for 2,100 tenant-days, but its actual level of activity was 2,070 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for June:

Data used in budgeting:

 Fixed element per month Variable element per tenant-day Revenue − \$ 35.40 Wages and salaries \$ 3,200 \$ 6.80 Food and supplies 500 9.90 Facility expenses 9,300 4.80 Administrative expenses 6,200 0.20 Total expenses \$ 19,200 \$ 21.70

Actual results for June:

 Revenue \$ 73,868 Wages and salaries \$ 17,116 Food and supplies \$ 21,883 Facility expenses \$ 19,656 Administrative expenses \$ 6,624

The wages and salaries in the planning budget for June would be closest to:

A) \$17,480

B) \$17,116

C) \$17,364

D) \$17,276

A) \$17,480

Explanation:

Data used in budgeting:

 Fixed element per month Variable element per tenant-day Wages and salaries \$ 3,200 \$ 6.80

During June, the kennel budgeted for 2,100 tenant-days.

Hence:

Wages and salaries in the planning budget for June = Fixed element per month+ budgeted tenant-days * Variable element per tenant-day

= \$3,200 + 2,100 * \$6.80

= \$17,480

Wages and salaries in the planning budget for June = \$17,480

As such option A is correct and other options B, C and D are incorrect.