Question

1. Juenemann 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 December, the kennel budgeted for 3,800 tenant-days, but its actual level of activity was 3,770 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for December:
   
   Data used in budgeting:
   

	Fixed element per month			Variable element per tenant-day
Revenue		−		$	33.90
Wages and salaries	$	2,900		$	7.60
Food and supplies		600			13.40
Facility expenses		9,000			4.00
Administrative expenses		7,500			0.30
Total expenses	$	20,000		$	25.30

Actual results for December:

Revenue	$	132,193
Wages and salaries	$	32,662
Food and supplies	$	48,918
Facility expenses	$	23,040
Administrative expenses	$	8,931

The activity variance for administrative expenses in December would be closest to:

• $291 F
• $291 U
• $9 F
• $9 U

Answer 1

Assumed Administrative Expenses in Budget [$7500 + ($.30 × 3800)]	$8640
Actual Administrative Expenses in Flexible budget [$7500 + ($.30 × 3770)]	$8631
Activity variance	$9 F

Activity Variance is $9 F favorable

Hence, $9 F is correct Answer