Tosta 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 2,100 tenant-days, but its actual level of activity was 2,050 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for May:
-The overall revenue and spending variance (i.e., the variance for net operating income in the revenue and spending variance column on the flexible budget performance report) for May would be closest to:
A) $3,490 F
B) $2,770 F
C) $3,490 U
D) $2,770 U

Question

Tosta 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 2,100 tenant-days, but its actual level of activity was 2,050 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for May: 
-The overall revenue and spending variance (i.e., the variance for net operating income in the revenue and spending variance column on the flexible budget performance report) for May would be closest to:
A) $3,490 F 
B) $2,770 F 
C) $3,490 U 
D) $2,770 U

Quizplus · Accepted Answer

The overall revenue and spending variance is calculated by subtracting the budgeted net operating income from the actual net operating income. In this case, the budgeted net operating income is $10,000 and the actual net operating income is $13,490. Therefore, the overall revenue and spending variance is $13,490 - $10,000 = $3,490 F.

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