Maliszewski 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 March, the kennel budgeted for 3,400 tenant-days, but its actual level of activity was 3,410 tenant-days. The kennel has provided the following data concerning the formulas to be used in its budgeting:
-The net operating income in the flexible budget for March would be closest to:
A)$14,625
B)$11,320
C)$11,408
D)$14,711

Question

Maliszewski 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 March, the kennel budgeted for 3,400 tenant-days, but its actual level of activity was 3,410 tenant-days. The kennel has provided the following data concerning the formulas to be used in its budgeting: 
-The net operating income in the flexible budget for March would be closest to:
A)$14,625 
B)$11,320 
C)$11,408 
D)$14,711

Quizplus · Accepted Answer

The net operating income in the flexible budget can be calculated as follows:

Sales Revenue = 1,900 * $8 = $15,200
Less: Variable Costs = 1,900 * $2 = $3,800
Fixed Costs = $6,992
Net Operating Income = $15,200 - $3,800 - $6,992 = $4,408

Therefore, the closest option is C: $11,408.

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