Gandrud Kennel uses tenant-days as its measure of activity; an animal housed in
ID: 2590757 • Letter: G
Question
Gandrud 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 June, the kennel budgeted for 2,760 tenant-days, but its actual level of activity was 2,740 tenant-days. The kennel has provided the following data concerning the formulas to be used in its budgeting Fixed Varlable element per element per month tenant-day Revenue Wages and salaries Food and supplies Facility expenses Administrative expenses Total expenses 40.30 $3,520 8.10 15.60 3.40 1.10 $23,655 28.20 1,335 10,700 8,100 The net operating income in the flexible budget for June would be closest to: O $9,757 O $12,449 O $9,499 O $12.230Explanation / Answer
Total revenue = 2740 tenant days*$40.30 = $110422
Less: Variable expenses = 2740*$28.20 = ($77268)
Less: Fixed expenses = ($23655)
Net operating income = $9499
Option C
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