Question

Requirement 1:

Dinham 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 4,100 tenant-days, but its actual level of activity was 4,130 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:

	Fixed element per month			Variable element per tenant-day
Revenue		-		$	35.00
Wages and salaries	$	3,000		$	8.00
Food and supplies		2,000			14.50
Facility expenses		8,500			3.50
Administrative expenses		7,000			0.50
Total expenses	$	20,500		$	26.50

Actual results for March:

Revenue	$	133,251
Wages and salaries	$	28,600
Food and supplies	$	62,225
Facility expenses	$	22,550
Administrative expenses	$	7,100

The revenue variance for March would be closest to:

Requirement 2:

Dinham 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 3,100 tenant-days, but its actual level of activity was 3,120 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:

	Fixed element per month			Variable element per tenant-day
Revenue		-		$	34.00
Wages and salaries	$	2,000		$	7.00
Food and supplies		1,000			13.50
Facility expenses		7,500			2.50
Administrative expenses		6,000			0.10
Total expenses	$	16,500		$	23.10

Actual results for March:

Revenue	$	104,372
Wages and salaries	$	28,500
Food and supplies	$	44,025
Facility expenses	$	14,900
Administrative expenses	$	7,090

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

Requirement 3:

Dinham 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 4,400 tenant-days, but its actual level of activity was 4,450 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:

	Fixed element per month			Variable element per tenant-day
Revenue		-		$	35.30
Wages and salaries	$	3,300		$	8.30
Food and supplies		2,300			14.80
Facility expenses		8,800			3.80
Administrative expenses		7,300			0.20
Total expenses	$	21,700		$	27.10

Actual results for March:

Revenue	$	138,230
Wages and salaries	$	28,630
Food and supplies	$	69,105
Facility expenses	$	25,115
Administrative expenses	$	7,103

The spending variance for facility expenses in March would be closest to:

Answer 1

Ans. 1	Revenue variance is the difference between Actual revenue and Flexible revenue.
	Flexible budgeted revenue = Actual activity * Revenue per tenant day
		4,130 * $35
		$144,550
	Revenue variance =   Flexible bugeted revenue - Actual revenue
		$144,550 - $133,251
		$11,299	Unfavorable
	*Increase in revenue from flexible budget to actual results =   Favorable.
	*Decrease in revenue from flexible budget to actual results =   Unfavorable.
Ans. 2	Spending variance is the difference between actual food and supplies & the
	flexible budget of food and supplies.
	Flexible budget for food and supplies = Fixed expenses + (Actual activity * Variable cost per tenant day)
		$1,000 + (3,120 * $13.50)
		$1,000 + $42,120
		$43,120
	Spending variance   = Actual results -   Flexible budget
		$44,025 - $43,120
		$905	Unfavorable
	*Increase in expenses from flexible budget to actual results =   Unfavorable.
	*Decrease in expenses from flexible budget to actual results =   Favorable.
Ans. 3	Spending variance is the difference between actual Facility expenses & the
	flexible budget of facility expenses.
	Flexible budget for facility expenses = Fixed expenses + (Actual activity * Variable cost per tenant day)
		$8,800 + (4,450 * $3.80)
		$8,800 + $16,910
		$25,710
	Spending variance   =   Flexible budget -   Actual results
		$25,710 - $25,115
		$595	Favorable
	*Increase in expenses from flexible budget to actual results =   Unfavorable.
	*Decrease in expenses from flexible budget to actual results =   Favorable.