Ordway 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 June, the kennel budgeted for 2,100 tenant-days, but its actual level of activity was 2,070 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for June: Data used in budgeting: Actual results for June: The facility expenses in the flexible budget for June would be closest to:
A)$19,941
B)$19,236
C)$19,375
D)$19,380

Question

Ordway 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 June, the kennel budgeted for 2,100 tenant-days, but its actual level of activity was 2,070 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for June: Data used in budgeting:  Actual results for June:  The facility expenses in the flexible budget for June would be closest to:
A)$19,941 
B)$19,236 
C)$19,375 
D)$19,380

Quizplus · Accepted Answer

Using the data provided, we can determine the flexible budget formula for facility expenses as follows:

Fixed portion: $15,600 
Variable portion: $2.50 per tenant-day

Plugging in the actual activity level of 2,070 tenant-days:

Fixed portion: $15,600 
Variable portion: $2.50 × 2,070 = $5,175

Total flexible budget for facility expenses: $15,600 + $5,175 = $20,775

Therefore, the closest option to the flexible budget for facility expenses would be option B: $19,236. This is the amount closest to the actual expense of $19,220, which falls within the flexible budget range of $20,775.

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