Tessmer 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 January, the kennel budgeted for 3,100 tenant-days, but its actual level of activity was 3,090 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for January: Data used in budgeting:
Actual results for January:
The net operating income in the flexible budget for January would be closest to:
A) $13,878
B) $13,788
C) $12,963
D) $13,070

Question

Tessmer 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 January, the kennel budgeted for 3,100 tenant-days, but its actual level of activity was 3,090 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for January: Data used in budgeting:
 Actual results for January:
 The net operating income in the flexible budget for January would be closest to:
A) $13,878 
B) $13,788 
C) $12,963 
D) $13,070

Quizplus · Accepted Answer

11eacbfc_c581_dab2_8ffe_cf233bd23966_TB7552_00 Net operating income = ($10.70 × 3,090) − $20,100 = $12,963

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