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Solution Library
Roye Kennel: calculate pending variance in a month
Question
Roye 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 September, Kennel budgeted for 3,300 tenant-days, but its actual level of activity was 3,340 tenant-days. Kennel has provided the following data concerning the formulas used in its budgeting and its actual results for September:
Data used in budgeting:
|
Fixed element |
Variable element per tenant-day |
|
|
Revenue |
— |
$34.20 |
|
Wages and salaries |
$2,200 |
$7.20 |
|
Expendables |
1,200 |
13.70 |
|
Facility expenses |
7,700 |
2.70 |
|
Administrative expenses |
6,200 |
0.30 |
|
Total expenses |
$17,300 |
$23.90 |
Actual results for September:
|
Revenue |
$111,226 |
|
Wages and salaries |
$28,520 |
|
Expendables |
$47,305 |
|
Facility expenses |
$15,750 |
|
Administrative expenses |
$7,092 |
The spending variance for facility expenses in September would be closest to:
a. $860 U
b. $968 F
c. $860 F
d. $968 U
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