8. Perla Kennel uses tenant-days as its measure of activity; an animal housed in

Question

8. Perla 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 2,330 tenant-days, but its actual level of activity was 2,290 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:

Actual results for March:

The revenue variance for March would be closest to:

A. $630 F

B. $2,194F

C. $630 U

D. $2,194 U

Fixed element per month Variable element per tenant-day Revenue $ 39.10 Wages and salaries $ 4,800 $ 8.60 Food and supplies 1,010 10.80 Facility expenses 9,950 7.40 Administrative expenses 7,700 1.50 Total expenses $ 23,460 $ 28.30

Explanation / Answer

Revenue in flexible budget = 2290*39.1= 89539 Revenue variance for March = 88909-89539 = 630 U Option C is correct

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