Lutts Kennel uses tenant-days as its measure of activity; an animal housed in th
ID: 2348866 • Letter: L
Question
Lutts 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 Novenber, the kennel budgeted for 3,800 tenant-days, but the actual level of activity was 3,850 tenant-days. The kennel has provided the following data concerning the formulas to be used in its budgeting:
Revenue ... --- $28.80
Wages and salaries $2,200 $6.60
Expendables 1,000 9.90
Facility expenses 8,100 4.00
Administrative expenses 6,000 0.40
______ ______
Total Expenses $17,300 $20.90
Q: The net operating income in the planning budget for November would be closets to:
A: $12,720
B: $9,648
C: $9,904
D: $13,115
Explanation / Answer
Budgeted Income = Contribution Margin * budgeted tenant days - Fixed Cost
Budgeted Income = (28.80 - 20.90) * 3,800 - 17,300
Budgeted Income = 30,020 - 17,300
Budgeted Income = $12,720
A: $12,720........(answer)
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