Question

In: Accounting

Paulis Kennel uses tenant-days as its measure of activity; an animal housed in the kennel for...

Paulis 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 February, the kennel budgeted for 3,900 tenant-days, but its actual level of activity was 3,880 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for February:

Data used in budgeting:

Fixed element per month Variable element per tenant-day
Revenue - $ 30.40
Wages and salaries $ 2,900 $ 6.40
Food and supplies 300 11.20
Facility expenses 7,900 3.40
Administrative expenses 7,700 0.40
Total expenses $ 18,800 $ 21.40

Actual results for February:

Revenue $ 107,680
Wages and salaries $ 23,490
Food and supplies $ 36,789
Facility expenses $ 19,240
Administrative expenses $ 9,138

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 February would be closest to:

Solutions

Expert Solution

Answer- 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 February would be closest to = $2903 F.

Explanation-

PAULIS KENNEL
Revenue & Spending Variances
For the month ended February
Particulars Flexible Budget Actual Results Variances Remark
$ $ $
Revenue 3880 tenant-days*$30.40 per tenant-days 117952 107680 -10272 Unfavorable
Less:-Expenses
Wages & salaries $2900+(3880 tenant-days*$6.40 per tenant-days) 27732 23490 4242 Favorable
Food and Supplies $300+(3880 tenant-days*$11.20 per tenant-days) 43756 36789 6967 Favorable
Facility Expenses $7900+(3880 tenant-days*$3.40 per tenant-days) 21092 19240 1852 Favorable
Administrative expenses $7700+(3880 tenant-days*$0.40 per tenant-days) 9252 9138 114 Favorable
Total Expenses 101832 88657 13175 Favorable
Income from opreations 16120 19023 2903 Favorable

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