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

Question

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 4,700 tenant-days, but its actual level of activity was 4,780 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 Variable Fixed element element per month tenant-day Revenue Wages and salaries Food and supplies Facility expenses Administrative expenses Total expenses $ 3,600 1,100 7,500 7,600 $19,800 $35.20 $ 8.60 15.10 4.10 0.50 $28.30 Actual results for March

Explanation / Answer

Facility expenses in Flexible budget =7500+(4780*4.10)= $27098 Spending vaiance for facility expenses = 27220-27098 = $122 U Option 1 is correct

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