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Solution Library
Galante Kennel: calculate variance in 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 3,700 tenant-days, but its actual level of activity was 3,680 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 |
— |
$30.20 |
|
Wages and salaries |
$2,700 |
$6.20 |
|
Expendables |
900 |
11.00 |
|
Facility expenses |
7,700 |
3.20 |
|
Administrative expenses |
7,500 |
0.20 |
|
Total expenses |
$18,800 |
$20.60 |
Actual results for May:
|
Revenue |
$107,480 |
|
Wages and salaries |
$23,470 |
|
Expendables |
$36,787 |
|
Facility expenses |
$19,220 |
|
Administrative expenses |
$9,134 |
The activity variance for net operating income in May would be closest to:
a. $2,149 U
b. $192 U
c. $192 F
d. $2,149 F
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