Fortmann 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 2,000 tenant-days, but its actual level of activity was 2,010 tenant-days. The kennel has provided the following data concerning the formulas to be used in its budgeting:

-The activity variance for wages and salaries in September would be closest to:
A)$595 U
B)$595 F
C)$75 U
D)$75 F

Question

Fortmann 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 2,000 tenant-days, but its actual level of activity was 2,010 tenant-days. The kennel has provided the following data concerning the formulas to be used in its budgeting:

-The activity variance for wages and salaries in September would be closest to:

-The activity variance for wages and salaries in September would be closest to:
A)$595 U 
B)$595 F 
C)$75 U 
D)$75 F

Quizplus · Accepted Answer

Activity variance for wages and salaries can be calculated using the formula: Actual Cost - Flexible Budget Cost.

Here, we are given:
Actual Cost = $100,000
Flexible Budget Cost = $100,075

Substituting the values in the formula:
Activity Variance = $100,000 - $100,075 = $75 U

Therefore, the closest option is C, which represents an activity variance of $75 under budget (U).

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