Kawamura 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 December, the kennel budgeted for 2,300 tenant-days, but its actual level of activity was 2,320 tenant-days. The kennel has provided the following data concerning the formulas to be used in its budgeting: The administrative expenses in the planning budget for December would be closest to:
A) $7,754
B) $7,560
C) $7,564
D) $7,687

Question

Kawamura 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 December, the kennel budgeted for 2,300 tenant-days, but its actual level of activity was 2,320 tenant-days. The kennel has provided the following data concerning the formulas to be used in its budgeting:  The administrative expenses in the planning budget for December would be closest to:
A) $7,754 
B) $7,560 
C) $7,564 
D) $7,687

Quizplus · Accepted Answer

Cost = Fixed cost + (Variable cost per unit × q)
= $7,100 + ($0.20 × 2,300) = $7,560

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