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

11ea7761_1770_c177_81a5_0b778bfb1df1_TB2580_00 11ea7761_1770_e888_81a5_9bfca393e7be_TB2580_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