9. Perla Kennel uses tenant-days as its measure of activity; an animal housed in

Question

9. Perla 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 March, the kennel budgeted for 2,250 tenant-days, but its actual level of activity was 2,210 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for March:

Data used in budgeting:

Actual results for March:

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

A. $137 F

B. $505 F

C. $505 U

D. $137 U

Fixed element per month Variable element per tenant-day Revenue $ 35.10 Wages and salaries $ 3,660 $ 7.80 Food and supplies 1,700 9.20 Facility expenses 8,550 5.80 Administrative expenses 10,000 0.70 Total expenses $ 23,910 $ 23.50

Explanation / Answer

Flexible budget expense for food and supplies=1700+(2210*9.2)= 22032 Spending variance for food and supplies = 22537-22032 = 505 U Option Cis correct

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