Galante Kennel uses tenant-days as its measure of activity; an animal housed in
ID: 2578833 • Letter: G
Question
Galante 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 May, Kennel budgeted for 5,200 tenant-days, but its actual level of activity was 5,220 tenant-days. Kennel has provided the following data concerning the formulas used in its budgeting and its actual results for May:
Data used in budgeting:
$21,200
$25.40
Actual results for May:
The overall revenue and spending variance (i.e., the variance for net operating income in the revenue and spending variance column on the flexible budget performance report) for May would be closest to:
$8,464 U
$8,338 F
$8,464 F
$8,338 U
Galante 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 May, Kennel budgeted for 5,200 tenant-days, but its actual level of activity was 5,220 tenant-days. Kennel has provided the following data concerning the formulas used in its budgeting and its actual results for May:
Explanation / Answer
Solution: $8338 F
Working:
Revenue
108980
Less
Wages and salaries
23620
Food and supplies
36802
Facility expenses
19370
Administrative expenses
9164
20024
Revenue per tenant day
31.7
Total variable expenses per tenant-day
25.4
Contribution margin per tenant-day
6.3
Ttotal fixed exp
21200
Flexible budget (6.3 * 5220 - 21200)
11686
Actual results
20024
Activity variance
8338
Favorable
Revenue
108980
Less
Wages and salaries
23620
Food and supplies
36802
Facility expenses
19370
Administrative expenses
9164
20024
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