Goodfriend 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 2,800 tenant-days, but its actual level of activity was 2,840 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 spending variance for expendables in June would be closest to:
A)$1,390 F
B)$1,930 U
C)$1,390 U
D)$1,930 F

Question

Goodfriend 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 2,800 tenant-days, but its actual level of activity was 2,840 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 spending variance for expendables in June would be closest to:

Data used in budgeting: Actual results for June: 
-The spending variance for expendables in June would be closest to:
A)$1,390 F 
B)$1,930 U 
C)$1,390 U 
D)$1,930 F

Quizplus · Accepted Answer

The spending variance is the difference between the actual spending and the budgeted spending. In this case, the actual spending is $19,300 and the budgeted spending is $20,690. Therefore, the spending variance is $19,300 - $20,690 = -$1,390. Since the actual spending is less than the budgeted spending, the spending variance is favorable and is denoted by a "U".

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