Q1: Zenon Kennel uses tenant-days as its measure of activity; an animal housed i

Question

Q1: Zenon 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 July, the kennel budgeted for 3,380 tenant-days, but its actual level of activity was 3,340 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for July:

Data used in budgeting:

Actual results for July:

The facility expenses in the flexible budget for July would be closest to:

a- $31,177

b- $30,636

c- $30,567

d- $30,440

Q2: Privett Hospital bases its budgets on patient-visits. The hospital's static planning budget for November appears below:

Actual results for the month were:

The spending variance for supplies costs in the flexible budget performance report for the month is:

Noreen 4e Rechecks 2017-31-03

a- $745 F

b- $1,945 U

c- $1,945 F

d- $745U

Fixed element per month Variable element per tenant-day Revenue $ 31.60 Wages and salaries $ 3,445 $ 5.90 Food and supplies 1,200 9.80 Facility expenses 8,730 6.50 Administrative expenses 7,130 1.20 Total expenses $ 20,505 $ 23.40

Actual results for July:

Revenue $ 102,934 Wages and salaries $ 22,641 Food and supplies $ 33,422 Facility expenses $ 29,830 Administrative expenses $ 11,578

The facility expenses in the flexible budget for July would be closest to:

a- $31,177

b- $30,636

c- $30,567

d- $30,440

Explanation / Answer

1

Answer: Option D) =30,440

facility expenses in the flexible budget for July would be closest to= $30440

Working notes for the above answer

Cost = Fixed Cost + (Variable Cost per unit * Quantity)
Quantity = 3,260 units
Facility Expenses = $8,730 + ($6.5* 3,340)
Facility Expenses = $8,730 + $21710

Facility Expenses = $30,440

_________________________________________

2

Answer: Option c) $1,945 F

The spending variance for supplies costs in the flexible budget= 1945 F

Working notes for the above answer

Flexible budget (4300x4)

17200

less: actual result

15255

Spending variance(17200-15255)

1945 (F)

Flexible budget (4300x4)

17200

less: actual result

15255

Spending variance(17200-15255)

1945 (F)

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