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Solution Library
Roye Kennel: calculate revenue variance
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 3,200 tenant-days, but its actual level of activity was 3,250 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 |
— |
$34.10 |
|
Wages and salaries |
$2,100 |
$7.10 |
|
Expendables |
1,100 |
13.60 |
|
Facility expenses |
7,600 |
2.60 |
|
Administrative expenses |
6,100 |
0.20 |
|
Total expenses |
$16,900 |
$23.50 |
Actual results for September:
|
Revenue |
$107,351 |
|
Wages and salaries |
$28,510 |
|
Expendables |
$46,025 |
|
Facility expenses |
$15,500 |
|
Administrative expenses |
$7,091 |
The revenue variance for September would be closest to:
a. $1,769 F
b. $1,769 U
c. $3,474 F
d. $3,474 U
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