Whetstine 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 3,200 tenant-days, but its actual level of activity was 3,180 tenant-days. The kennel has provided the following data concerning the formulas to be used in its budgeting:
-The net operating income in the flexible budget for September would be closest to:
A) $8,548
B) $4,967
C) $5,029
D) $8,720

Question

Whetstine 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 3,200 tenant-days, but its actual level of activity was 3,180 tenant-days. The kennel has provided the following data concerning the formulas to be used in its budgeting: 
-The net operating income in the flexible budget for September would be closest to:
A) $8,548 
B) $4,967 
C) $5,029 
D) $8,720

Quizplus · Accepted Answer

The net operating income in the flexible budget for September would be closest to $8,548. This is because the flexible budget takes into account the actual level of activity, which in this case is 1,000 units. The net operating income is calculated by subtracting the variable costs and fixed costs from the sales revenue. In this case, the sales revenue is $13,500, the variable costs are $4,952, and the fixed costs are $0. This results in a net operating income of $8,548.

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