Smithj 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 3,500 tenant-days, but its actual level of activity was 3,490 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)$1,055 U
B)$970 U
C)$970 F
D)$1,055 F

Question

Smithj 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 3,500 tenant-days, but its actual level of activity was 3,490 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)$1,055 U 
B)$970 U 
C)$970 F 
D)$1,055 F

Quizplus · Accepted Answer

The revenue and spending variance is calculated by comparing the actual net operating income to the flexible budget net operating income. A variance labeled "U" indicates an unfavorable variance, meaning actual results were worse than expected.

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