Dinham Kennel uses tenant-days as its measure of activity; an animal housed in the kennel for one day is counted as one tenant-d

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Dinham Kennel uses tenant-days as its measure of activity; an animal housed in the kennel for one day is counted as one tenant-d

ay. During March, the kennel budgeted for 4,600 tenant-days, but its actual level of activity was 4,670 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for March: Data used in budgeting: Fixed element per month Variable element per tenant-day Revenue - $35.10 Wages and salaries$3,500 $8.50 Food and supplies 1,000 15.00 Facility expenses 9,000 4.00 Administrative expenses 7,500 0.40 Total expenses$21,000 $27.90 Actual results for March: Revenue$143,330 Wages and salaries$28,650 Food and supplies$71,345 Facility expenses$27,130 Administrative expenses$7,105 The overall revenue and spending variance (i.e., the variance for net operating income in the revenue and spending variance column on the flexible budget performance report) for March would be closest to: Multiple Choice $3,020 F $3,524 F $3,020 U $3,524 U Next Visit question mapQuestion 9 of 10 Total9 of 10 Prev

Business

1 answer:

NeTakaya · Answer 1 · 2020-08-21T16:13:40+03:00

Answer:

$3,524 Unfavorable

Explanation:

The computation of Overall revenue and spending variance is shown below:-

Net income from actual result = Revenue - Wages and salaries - Food and supplies - Facility expenses - Administrative expenses

= $143,330 - $28,650 - $71,345 - $27,130 - $7,105

= $9,100

Flexible budget net income = (Revenue - Total expenses) × Actual level activity - Total expenses

= ($35.10 - $27.90) × 4,670 - $21,000

= $7.2 × 4,670 - $21,000

= $12,624

Overall revenue and spending variance = Flexible budget net income - Net income from actual result

= $12,624 - $9,100

= $3,524 Unfavorable