Lutts 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 November, the kennel budgeted for 3,800 tenant-days, but its actual level of activity was 3,850 tenant-days. The kennel has provided the following data concerning the formulas to be used in its budgeting:
-The wages and salaries in the planning budget for November would be closest to:
A) $27,610
B) $27,280
C) $28,238
D) $28,610

Question

Lutts 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 November, the kennel budgeted for 3,800 tenant-days, but its actual level of activity was 3,850 tenant-days. The kennel has provided the following data concerning the formulas to be used in its budgeting: 
-The wages and salaries in the planning budget for November would be closest to:
A) $27,610 
B) $27,280 
C) $28,238 
D) $28,610

Quizplus · Accepted Answer

Using the formula for wages and salaries, we have: 
Planning budget = $6,800 + ($3.60 × 3,800) = $20,680

To get the actual wages and salaries, we use the flexible budget formula: 
Flexible budget = $6,800 + ($3.60 × 3,850) = $20,840

The actual wages and salaries incurred are $27,280, which is closest to option B.

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