Gorley 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 February, the kennel budgeted for 3,900 tenant-days, but its actual level of activity was 3,940 tenant-days. The kennel has provided the following data concerning the formulas to be used in its budgeting:
-The activity variance for wages and salaries in February would be closest to:
A) $1,152 U
B) $1,152 F
C) $292 U
D) $292 F

Question

Gorley 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 February, the kennel budgeted for 3,900 tenant-days, but its actual level of activity was 3,940 tenant-days. The kennel has provided the following data concerning the formulas to be used in its budgeting: 
-The activity variance for wages and salaries in February would be closest to:
A) $1,152 U 
B) $1,152 F 
C) $292 U 
D) $292 F

Quizplus · Accepted Answer

To calculate the activity variance for wages and salaries, we need to use the formula:

Activity Variance = (Actual Quantity - Budgeted Quantity) x Budgeted Price

From the given data, we know that the budgeted quantity was 3,900 tenant-days and the actual quantity was 3,940 tenant-days, so the difference is:

Actual Quantity - Budgeted Quantity = 3,940 - 3,900 = 40 tenant-days

We also know from the data provided that the budgeted price for wages and salaries was $7.20 per tenant-day. Therefore, the activity variance can be calculated as:

Activity Variance = (Actual Quantity - Budgeted Quantity) x Budgeted Price
= 40 x $7.20
= $288 U

So the closest answer choice is C, $292 U.

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