Jauron 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 September, the kennel budgeted for 2,300 tenant-days, but its actual level of activity was 2,310 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for September:
-The administrative expenses in the planning budget for September would be closest to:
A) $7,362
B) $7,181
C) $7,360
D) $7,212

Question

Jauron 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 September, the kennel budgeted for 2,300 tenant-days, but its actual level of activity was 2,310 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for September: 
-The administrative expenses in the planning budget for September would be closest to:
A) $7,362 
B) $7,181 
C) $7,360 
D) $7,212

Quizplus · Accepted Answer

To calculate the administrative expenses, we need to use the formula:

Administrative expenses = Budgeted administrative cost per tenant-day x Actual tenant-days

In the planning budget, the kennel budgeted for 2,300 tenant-days and the total administrative expenses were $16,700. Therefore, the budgeted administrative cost per tenant-day was:

Budgeted administrative cost per tenant-day = Total administrative expenses / Budgeted tenant-days
Budgeted administrative cost per tenant-day = $16,700 / 2,300
Budgeted administrative cost per tenant-day = $7.26

Using this cost per tenant-day and the actual level of activity of 2,310 tenant-days, we can find the actual administrative expenses:

Actual administrative expenses = Budgeted administrative cost per tenant-day x Actual tenant-days
Actual administrative expenses = $7.26 x 2,310
Actual administrative expenses = $16,806.60

Therefore, the closest option is C) $7,360.

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