Fortmann 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 September, the kennel budgeted for 2, 000 tenant-days, but its actual level of activity was 2, 010 tenant-days.The kennel has provided the following data concerning the formulas to be used in its budgeting: The activity variance for wages and salaries in September would be closest to:
A)$595 U
B)$595 F
C)$75 U
D)$75 F

Question

Fortmann 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 September, the kennel budgeted for 2, 000 tenant-days, but its actual level of activity was 2, 010 tenant-days.The kennel has provided the following data concerning the formulas to be used in its budgeting:  The activity variance for wages and salaries in September would be closest to:
A)$595 U 
B)$595 F 
C)$75 U 
D)$75 F

Quizplus · Accepted Answer

Activity variance for wages and salaries = (Actual hours worked - Budgeted hours worked) x Hourly rate
From the given data, we can calculate the budgeted hourly rate for wages and salaries as:
Budgeted wages and salaries = $5,600
Budgeted tenant-days = 2,000
Budgeted hourly rate = Budgeted wages and salaries / Budgeted tenant-days
= $5,600 / 2,000
= $2.80 per tenant-day

Actual wages and salaries = $5,725
Actual tenant-days = 2,010
Actual hourly rate = Actual wages and salaries / Actual tenant-days
= $5,725 / 2,010
= $2.85 per tenant-day

Activity variance for wages and salaries = (Actual tenant-days - Budgeted tenant-days) x Budgeted hourly rate
= (2,010 - 2,000) x $2.80
= $28 U

Therefore, the closest option is C) $75 U.

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