Galante Kennel: Calculate net operating income for a month

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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 per month	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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