Deep Purple Kennel uses tenant-days as its measure of activity; an animal housed

Question

Deep Purple 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 3,800 tenant-days, but its actual level of activity was 3,830 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:

$19,300

$25.30      

Actual results for February:

The spending variance for food and supplies in February would be closest to:

a.) $889 U

b.) $1,315 U

c.) $1,315 F

d.) $889 F

Deep Purple 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 3,800 tenant-days, but its actual level of activity was 3,830 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for February:

Explanation / Answer

The right answer is Option (a) $889 U

Flexible budget 1700+(14.20*3830) 56086 Actual Results 56975 Spending Variance -889 Actual is more than Flexible budgeted. Therefore, it is unfavourable. Spending Variance = 889 U

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