6 Smithj Kennel uses tenant-days as its measure of activity, an animal housed In

Question

6 Smithj 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 4,100 tenant-days, but its actual level of activity was 4,130 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 Varlable element per tenant-day Revenue $35.00 Wages and salarles Food and supplies Facility expenses Administrative expenses Total expenses $3,000 2,000 8,500 7,000 $20,500 $8.00 14.50 3.50 0.50 $26.50 Actual results for February Revenue $133,251 $28,600 $62,225 Wages and salarles Food and supplies Facility expenses Administrative expenses $7,100 The overall revenue and spending varlance (e., the varlance for net operating Income In the revenue and spending varlance column on the revenue and spending varlances report) for February would be closest to O $1.829 F O$1,829 U O $1,574 F $1,574 U

Explanation / Answer

6 Actual Flexible budget Revenue 133251 144550 Expenses: Wages and salaries 28600 36040 Food and supplies 62225 61885 Facility expenses 22550 22955 Administrative expenses 7100 9065 Total expenses 120475 129945 Net operating income 12776 14605 Overall revenue and spending varaince = 14605-12776 = 1829 Unfavorable 7 Revenue variance = 293200-(8250*35.7)=1325 Unfavorable

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