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Galante Kennel: calculate variance in 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 3,700 tenant-days, but its actual level of activity was 3,680 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

$30.20

     

Wages and salaries

$2,700

$6.20

Expendables

900

11.00

Facility expenses

7,700

3.20

Administrative expenses

7,500

0.20

Total expenses

$18,800

$20.60

Actual results for May:

Revenue

$107,480

   

Wages and salaries

$23,470

Expendables

$36,787

Facility expenses

$19,220

Administrative expenses

$9,134


The activity variance for net operating income in May would be closest to:

a. $2,149 U

b. $192 U

c. $192 F

d. $2,149 F

 

 

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