Virgen 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, the kennel budgeted for 3,700 tenant-days, but its actual level of activity was 3,690 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for May: Data used in budgeting:
Actual results for May:
The administrative expenses in the planning budget for May would be closest to:
A) $8,409
B) $8,386
C) $8,280
D) $8,276

Question

Virgen 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, the kennel budgeted for 3,700 tenant-days, but its actual level of activity was 3,690 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for May: Data used in budgeting:
 Actual results for May:
 The administrative expenses in the planning budget for May would be closest to:
A) $8,409 
B) $8,386 
C) $8,280 
D) $8,276

Quizplus · Accepted Answer

Cost = Fixed cost + (Variable cost per unit × q)
= $6,800 + ($0.40 × 3,700) = $8,280

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