Question

Perla 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 2,280 tenant-days, but its actual level of activity was 2,240 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		−		$	36.60
Wages and salaries	$	5,370		$	8.10
Food and supplies		1,220			9.80
Facility expenses		8,850			6.40
Administrative expenses		7,450			1.00
Total expenses	$	22,890		$	25.30

Actual results for March:

Revenue	$	81,404
Wages and salaries	$	23,314
Food and supplies	$	23,692
Facility expenses	$	22,276
Administrative expenses	$	9,750

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

Answer 1

Actual Level of Activity	2240 tennant Days
	Fixed elements per month ($)	Variable element per tenant day ($)	TOTAL
Food and supplies	1220	9.8
Flexible Budget - Food and Supplies (2240*9.8)	1220	21952	23172
Actual Expenses - Food and Supplies			23692
Spending Variance for Food and supplies (23692-23172)			520 Unfavorable