Nicolini 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 October, the kennel budgeted for 2,200 tenant-days, but its actual level of activity was 2,250 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for October:

Data used in budgeting:

Actual results for October:

-The activity variance for wages and salaries in October would be closest to:
A)$580 F
B)$370 F
C)$370 U
D)$580 U

Question

Nicolini 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 October, the kennel budgeted for 2,200 tenant-days, but its actual level of activity was 2,250 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for October:

Data used in budgeting:

Actual results for October:

-The activity variance for wages and salaries in October would be closest to:

Data used in budgeting:

Actual results for October:

-The activity variance for wages and salaries in October would be closest to:
A)$580 F 
B)$370 F 
C)$370 U 
D)$580 U

Quizplus · Accepted Answer

Since the question asks for the activity variance, we need to find the difference between the actual amount spent on wages and salaries in October and the flexed (budgeted) amount. 
The question provides two pieces of information to calculate this variance: 
- Flexed (budgeted) amount = $8,120 
- Actual amount spent in October = $7,750

To calculate the variance, we use the formula: 
Variance = actual amount - flexed amount

Plugging in the numbers: 
Variance = $7,750 - $8,120 
Variance = -$370

Since the result is negative, it means that the actual amount spent ($7,750) is less than the flexed (budgeted) amount ($8,120). This is known as an unfavorable variance. 
However, the question asks for the absolute value of the variance, which is $370. Since the actual amount spent is less than the budgeted amount, the variance is unfavorable or unfavorable. The closest option to this variance is C) $370 U.

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