5) Kawamura K for one day is counted as one enant-days, but its actual level of

Question

5) Kawamura K for one day is counted as one enant-days, but its actual level of activity was 2,320 tenant-days. following data concerning the formulas to be used in its budgeting: ennel uses tenant-days as its measure of activity; an animal housed in the kennel tenant-day. During December, the kennel budgeted for 2,300 The kennel has provided the Fixed Element per Month Variable element per tenant-day Revenue S 37.70 Wages and salaries Food and supplies Facility expenses Administrative expenses Total expenses $ 3,000 800 9,800 7,100 S 20.700 6.10 13.40 4.70 0.20 $ 24.40 The wages and salaries in the planning budget for December would be closest to: A) $17,787 B) S17,942 C) $17,152 D) $17,030 6 Kawamura 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 December, the kennel budgeted for 2,300 tenant-days, but its actual level of activity was 2,320 tenant-days. The kennel has provided the following data concerning the formulas to be used in its budgeting: Fixed Element per Month Variable element per tenant-day Revenue S 37.70 Wages and salaries Food and supplies Facility expenses Administrative expenses Total expenses S 3,000 800 9,800 7,100 $ 20,700 S 6.10 13.40 4.70 0.20 S 24.40 The net operating income in the planning budget for December would be closest to: A) $10,156 B) $9,890 C) $7,309 D) $7,184

Explanation / Answer

Solution 5:

Kennel budgeted level of activity = 2300 tenant days

Wages and salaries in planning budget = Fixed cost + Variable cost = $3,000 + (2300 * $6.10) = $17,030

hence option d is correct.

Solution 6:

Sales revenue for planning budget = 2300 * $37.70 = $86,710

Total variable cost in planning budget = 2300 * $24.40 = $56,120

Fixed cost in planning budget = $20,700

Net operating income in the planning budget = Sales - Variable cost - Fixed cost

= $86,710 - $56,120 - $20,700 = $9,890

Hence option B is correct.

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