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Galante Kennel: Calculate net operating income for a month

Question

Galante 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 May, Kennel budgeted for 4,900 tenant-days, but its actual level of activity was 4,880 tenant-days. Kennel has provided the following data concerning the formulas used in its budgeting and its actual results for May:


Data used in budgeting:

 

Fixed element
per month

Variable element per tenant-day

Revenue

$31.40

     

Wages and salaries

$3,900

$7.40

Expendables

500

12.20

Facility expenses

8,900

4.40

Administrative expenses

8,700

0.20

Total expenses

$22,000

$24.20


Actual results for May:

Revenue

$108,680

   

Wages and salaries

$23,590

Expendables

$36,799

Facility expenses

$19,340

Administrative expenses

$9,158

The net operating income in the planning budget for May would be closest to:

a. $13,280

b. $19,793

c. $19,699

d. $13,136

 

 

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