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 net operating income in the flexible budget for February would be closest to:
A) $9,900
B) $10,083
C) $9,664
D) $10,246

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 net operating income in the flexible budget for February would be closest to:
A) $9,900 
B) $10,083 
C) $9,664 
D) $10,246

Quizplus · Accepted Answer

11eacbfc_c597_0ffb_8ffe_8f6001d088d1_TB7552_00 Net operating income = ($11.80 × 2,480) − $19,600 = $9,664

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