Leaphart 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, 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 to be used in its budgeting: The administrative expenses in the planning budget for May would be closest to:
A)$7, 026
B)$6, 927
C)$7, 336
D)$7, 320

Question

Leaphart 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, 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 to be used in its budgeting:  The administrative expenses in the planning budget for May would be closest to:
A)$7, 026 
B)$6, 927 
C)$7, 336 
D)$7, 320

Quizplus · Accepted Answer

Cost = Fixed cost + (Variable cost per unit × q)
= $6, 200 + ($0.40 × 2, 800)= $7, 320

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