Paulis 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 February, the kennel budgeted for 2,500 tenant-days, but its actual level of activity was 2,480 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for February: Data used in budgeting:
Actual results for February:
The activity variance for net operating income in February would be closest to:
A) $264 F
B) $264 U
C) $236 F
D) $236 U

Question

Paulis 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 February, the kennel budgeted for 2,500 tenant-days, but its actual level of activity was 2,480 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for February: Data used in budgeting:
 Actual results for February:
 The activity variance for net operating income in February would be closest to:
A) $264 F 
B) $264 U 
C) $236 F 
D) $236 U

Quizplus · Accepted Answer

11eacbfc_c597_5e1e_8ffe_c34e36713e2b_TB7552_00 11eacbfc_c597_852f_8ffe_dfb2146253b9_TB7552_00 Because the flexible budget net operating income is less than the planning budget, the variance is unfavorable (U).

Paulis Kennel Uses Tenant-Days as Its Measure of Activity; an Animal