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Solution Library
Roye Kennel: calculate spending 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 4,800 tenant-days, but its actual level of activity was 4,820 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 |
— |
$35.30 |
|
Wages and salaries |
$2,000 |
$8.70 |
|
Expendables |
1,200 |
15.20 |
|
Facility expenses |
7,600 |
4.20 |
|
Administrative expenses |
7,700 |
0.60 |
|
Total expenses |
$18,500 |
$28.70 |
Actual results for September:
|
Revenue |
$145,135 |
|
Wages and salaries |
$28,670 |
|
Expendables |
$75,065 |
|
Facility expenses |
$27,230 |
|
Administrative expenses |
$7,107 |
The spending variance for expendables in September would be closest to:
- $905 U
- $905 F
- $601 U
- $601 F
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