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Solution Library
Galante Kennel: Calculate net operating income for a month
Question
Galante 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 May, Kennel budgeted for 4,900 tenant-days, but its actual level of activity was 4,880 tenant-days. Kennel has provided the following data concerning the formulas used in its budgeting and its actual results for May:
Data used in budgeting:
|
Fixed element |
Variable element per tenant-day |
|
|
Revenue |
— |
$31.40 |
|
Wages and salaries |
$3,900 |
$7.40 |
|
Expendables |
500 |
12.20 |
|
Facility expenses |
8,900 |
4.40 |
|
Administrative expenses |
8,700 |
0.20 |
|
Total expenses |
$22,000 |
$24.20 |
Actual results for May:
|
Revenue |
$108,680 |
|
Wages and salaries |
$23,590 |
|
Expendables |
$36,799 |
|
Facility expenses |
$19,340 |
|
Administrative expenses |
$9,158 |
The net operating income in the planning budget for May would be closest to:
a. $13,280
b. $19,793
c. $19,699
d. $13,136
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