Ordway 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 June, the kennel budgeted for 2,100 tenant-days, but its actual level of activity was 2,070 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for June:

Data used in budgeting:

Actual results for June:

-The net operating income in the flexible budget for June would be closest to:
A)$8,713
B)$9,159
C)$8,466
D)$9,570

Question

Ordway 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 June, the kennel budgeted for 2,100 tenant-days, but its actual level of activity was 2,070 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for June:

Data used in budgeting:

Actual results for June:

-The net operating income in the flexible budget for June would be closest to:

Data used in budgeting:

Actual results for June:

-The net operating income in the flexible budget for June would be closest to:
A)$8,713 
B)$9,159 
C)$8,466 
D)$9,570

Quizplus · Accepted Answer

To calculate the net operating income in the flexible budget for June, we need to subtract the total variable and fixed costs from the total revenue. 
Total revenue = 89,400 + 2,400*15 = 126,900 
Total variable costs = 48,000 + 2,400*7 = 54,000 
Total fixed costs = 54,000 
Net operating income = Total revenue - Total variable costs - Total fixed costs = 126,900 - 54,000 - 54,000 = $18,900 
Therefore, the closest answer choice is B, $9,159.

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