Fortmann Kennel uses tenant-days as its measure of activity; an animal housed in
ID: 2484940 • Letter: 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:
FIXED ELEMENT PER MONTH:
Revenue…..-
Wages and salaries……..$2,500
Food and supplies………$600
Facility expenses………$8,700
Admin expenses……..$6,000
Total expenses…….$17,800
VARIABLE ELEMENT PER TENANT DAY:
Revenue…..$38.10
Wages and salaries……..$7.50
Food and supplies………$13.90
Facility expenses………$3.10
Admin expenses……..$0.10
Total expenses…….$24.60
The activity variance for administrative expenses in September would be closest to:
$89 F
$1 F
$1 U
$89 U
Please show all work
$89 F
$1 F
$1 U
$89 U
Please show all work
Explanation / Answer
Activity Variance for Administrative expenses
= (Budgeted sales - Actual Sales) * Variable Admin expences
= (2000 - 2010) * 0.10 = $1 U