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 overall revenue and spending variance (i.e., the variance for net operating income in the revenue and spending variance column on the flexible budget performance report) for February would be closest to:
A) $500 F
B) $500 U
C) $264 F
D) $264 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 overall revenue and spending variance (i.e., the variance for net operating income in the revenue and spending variance column on the flexible budget performance report) for February would be closest to:
A) $500 F 
B) $500 U 
C) $264 F 
D) $264 U

Quizplus · Accepted Answer

11eacbfc_c597_d352_8ffe_679bae27e856_TB7552_00 11eacbfc_c597_d353_8ffe_73684ae64fcb_TB7552_00 Because the actual net operating income is greater than the flexible budget, the variance is favorable (F).

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