Question

Use the following data for questions 17 and 19:

Roye 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 September, the kennel budgeted for 3,300 tenant-days, but its actual level of activity was 3,330 tenant-

days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for

September:

Static budget for Septemeber:

Fixed

element per

month

Variable

element per

tenant-day

Revenue .............................................

-

$34.70

Wages and salaries.............................

$ 2,600

$ 7.70

Expendables.......................................

1,400

14.50

Facility expenses................................

8,200

3.30

Administrative expenses....................

6,700

0.20

Total expenses ...................................

$18,900

$25.70

Actual results for September:

Revenue .............................................

$112,721

Wages and salaries.............................

$28,691

Expendables.......................................

$50,435

Facility expenses................................

$18,899

Administrative expenses....................

$7,096

17.

The sales price variance for September would be closest to:

A. $1,789 U B. $2,830 U

C. $2,830 F

D. $1,789 F

18.

The price variance for expendables in September would be closest to:

A. $1,185 F

B. $1,185 U

C. $750 F

D. $750 U

19.

The sales volume variance for September would be closest to:

A. $2,830 U

B. $1,185 U

C. $1,041 F

D. $750 U

Answer 1

Part 17 )

The correct answer is B) $ 2830 U

Calculation and explanation

Sales price variance= actual sales revenue- ( standard price × actual sales units)

= 112721 - (34.7×3330)

= $ 2830 unfavorable

Part 2)

The correct answer is D) $ 750 U

Price variance for expendables

= actual cost- standard cost

= 50435 - (1400+(14.5×3330))

= 50435 - 49685

= $ 750 Unfavorable

Part 19)

The correct answer is c) $ 1041 F

Sales volume variance = ( actual qty - standard qty)× standard price

= (3330-3300)×34.7

= $ 1041 Favourable