Swader 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 March, the kennel budgeted for 2,900 tenant-days, but its actual level of activity was 2,930 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for March:
-The expendables in the flexible budget for March would be closest to:
A) $25,905
B) $25,650
C) $27,274
D) $26,719

Question

Swader 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 March, the kennel budgeted for 2,900 tenant-days, but its actual level of activity was 2,930 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for March: 
-The expendables in the flexible budget for March would be closest to:
A) $25,905 
B) $25,650 
C) $27,274 
D) $26,719

Quizplus · Accepted Answer

The expendables in the flexible budget for March would be closest to $25,905 because the flexible budget is based on the actual activity level for the month, and the actual activity level for March was 10,362 units. The variable cost per unit is $2.50, so the total variable cost for March would be $25,905 (10,362 units x $2.50 per unit).

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