Pearse Kennel uses tenant-days as its measure of activity; an animal housed in t

Question

Pearse 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 December, the kennel budgeted for 4,900 tenant-days, but its actual level of activity was 4,880 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for December:

Data used in budgeting:

$22,000

$24.20     

Actual results for December:

The net operating income in the flexible budget for December would be closest to:

Pearse 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 December, the kennel budgeted for 4,900 tenant-days, but its actual level of activity was 4,880 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for December:

Explanation / Answer

Pearse Kennel Flexible Budget for Dec Amt in $ Details Cost Formula Flexible budget Amt   Revenue cost details Fixed /month Variable/tenant days Units of Tenant Days              4,880 Revenue              31.40              153,232 Expenses Wages & Salaries         3,900.00                 7.40                 40,012 Food & Supplies             500.00              12.20                 60,036 Facility Expenses         8,900.00                 4.40                 30,372 Admin Expense         8,700.00                 0.20                   9,676 Total Expenses       22,000.00              24.20              140,096 Net Operating Income =                 13,136 So Net operating Income in the flexible budget for Dec=   $ 13,136.00

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