Grohs 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 December, the kennel budgeted for 2,500 tenant-days, but its actual level of activity was 2,530 tenant-days. The kennel has provided the following data concerning the formulas to be used in its budgeting: The food and supplies in the flexible budget for December would be closest to:
A) $30,000
B) $30,348
C) $29,791
D) $30,510

Question

Grohs 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 December, the kennel budgeted for 2,500 tenant-days, but its actual level of activity was 2,530 tenant-days. The kennel has provided the following data concerning the formulas to be used in its budgeting:  The food and supplies in the flexible budget for December would be closest to:
A) $30,000 
B) $30,348 
C) $29,791 
D) $30,510

Quizplus · Accepted Answer

Using the formula provided in the data:
Flexible budget = Budgeted cost + (Actual level of activity - Budgeted activity) x Budgeted cost per unit
We can calculate the flexible budget for food and supplies:
Flexible budget = $27,500 + (2,530 - 2,500) x $0.66
Flexible budget = $27,500 + 19.8
Flexible budget = $30,348
Therefore, the closest option is B) $30,348.

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