Galante Kennel uses tenant-days as its measure of activity; an animal housed in
ID: 2654672 • 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 3,500 tenant-days, but its actual level of activity was 3,480 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:
$18,000
$20.40
Actual results for May:
The net operating income in the flexible budget for May would be closest to:
$18,715
$18,621
$15,408
$15,600
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 3,500 tenant-days, but its actual level of activity was 3,480 tenant-days. Kennel has provided the following data concerning the formulas used in its budgeting and its actual results for May:
Explanation / Answer
Net Operating Income in Flexible Budget
Revenue = 3500*30 = 105000
Expenses = Fixed+ Variable
= 18000+3500*20.4 = $ 89400
Net Operating Income = 105000-89400
= $ 15600
The correct answer is $ 15600
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