Question

Smith 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 5,000 tenant-days, but its actual level of activity was 5,030 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 Variable element element per month per tenant-day $35.50 Revenue Wages and salarles Food and supplies Facility expenses Administrative expenses Total expenses $2,200 1,400 7,800 6,300 $17,700 $8.90 15.40 4.40 0.20 $28.90 Actual results for February: Revenue $151,125 Wages and salarles Food and supplies Facility expenses Administrative expenses $28,690 $79,225 $29,130 $7,109 The overall revenue and spending varlance (.e., the variance for net operating Income in the revenue and spending variance column on the revenue and spending variances report) for February would be closest to: $8,329 F $8,329 U $8,527 U $8,527 F

Answer 1

	Actual results	Flexible budget
Revenue	151125	178565	=5030*35.50
Expenses:
Wages and Salaries	28690	46967	=2200+(5030*8.9)
Food and supplies	79225	78862	=1400+(5030*15.4)
Facility expenses	29130	29932	=7800+(5030*4.4)
Administrative expenses	7109	7306	=6300+(5030*0.2)
Total expenses	144154	163067
Net Operating income	6971	15498
Overall revenue and spending variance	8527 U	=15498-6971
Option C $8,527 U is correct