Hubbard 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 2,100 tenant-days, but its actual level of activity was 2,060 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 wages and salaries in the planning budget for January would be closest to:
A) $17,282
B) $17,618
C) $17,420
D) $17,132

Question

Hubbard 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 2,100 tenant-days, but its actual level of activity was 2,060 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 wages and salaries in the planning budget for January would be closest to:
A) $17,282 
B) $17,618 
C) $17,420 
D) $17,132

Quizplus · Accepted Answer

First, we need to find the variable cost per tenant-day. According to the given data:

Variable cost per tenant-day = Budgeted variable costs ÷ Budgeted tenant-days = $12,210 ÷ 2,100 = $5.81 per tenant-day

Using this variable cost per tenant-day, we can calculate the flexible budget for actual activity level:

Flexible budget = Variable cost per tenant-day x Actual tenant-days = $5.81 x 2,060 = $11,967.60

Now, we can calculate the total wages and salaries for January:

Total wages and salaries = Fixed costs + Variable cost per tenant-day x Actual tenant-days
= $5,480 + $5.81 x 2,060
= $17,419.60

Therefore, the closest option is C) $17,420.

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