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

Question

8. Gandrud 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 2,700 tenant-days, but its actual level of activity was 2,680 tenant-days. The kennel has provided the following data concerning the formulas to be used in its budgeting: Variable element per Fixed element per month tenant-day Revenue Wages and salaries Food and supplies Facility expenses $3910 $ 3,895780 15.00 3.10 0.80 24,325 $26.70 1,370 9,850 9,210 Total expenses The net operating income in the flexible budget for June would be closest to: O $9,165 $11,857 O $8,907 $11638

Explanation / Answer

Per tenant days Total amount Tenant days 2680 Sales 39.1 104788 Variable costs (7.80+15+3.10+0.80) 26.7 71556 Contribution 33232 Fixed costs 24325 Operating Income 8907 Thus, its third alternative which correct with answer $8907

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