Kari 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 May, the kennel budgeted for 3,200 tenant-days, but its actual level of activity was 3,230 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for May: Data used in budgeting: Actual results for May: The administrative expenses in the planning budget for May would be closest to:
A)$7,879
B)$7,806
C)$7,960
D)$7,969

Question

Kari 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 May, the kennel budgeted for 3,200 tenant-days, but its actual level of activity was 3,230 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for May: Data used in budgeting:  Actual results for May:  The administrative expenses in the planning budget for May would be closest to:
A)$7,879 
B)$7,806 
C)$7,960 
D)$7,969

Quizplus · Accepted Answer

The formula for administrative expenses is: 
$6,800 + ($0.50 per tenant-day * number of tenant-days)
Using the actual level of activity of 3,230 tenant-days, we can calculate the actual administrative expenses:
$6,800 + ($0.50 per tenant-day * 3,230 tenant-days) = $8,415
Therefore, the closest option to the planned administrative expenses of $7,960 would be option C, $7,879.

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