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7 October, 09:36

Dinham 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 March, the kennel budgeted for 4,700 tenant-days, but its actual level of activity was 4,780 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for March: Data used in budgeting: Fixed element per month Variable element per tenant-day Revenue - $ 35.20 Wages and salaries $ 3,600 $ 8.60 Food and supplies 1,100 15.10 Facility expenses 7,500 4.10 Administrative expenses 7,600 0.50 Total expenses $ 19,800 $ 28.30 Actual results for March: Revenue $ 144,230 Wages and salaries $ 28,660 Food and supplies $ 74,070 Facility expenses $ 27,220 Administrative expenses $ 7,106 The spending variance for food and supplies in March would be closest to:

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  1. 7 October, 12:36
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    The spending variance for food and supplies in March would be closest to $122 U

    Explanation:

    In order to calculate the spending variance for food and supplies in March we would have to use the following formula:

    Spending variance = Budgeted cost - Actual cost

    Budgeted facility expenses for actual tenant days = $7,500 + (4780*$4.10) Budgeted facility expenses for actual tenant days = $27,098

    Actual facility expenses = $27,220

    Therefore, Spending variance = $27,098 - $27,220 = $122 U

    Spending variance = $122 U

    The spending variance for food and supplies in March would be closest to $122 U
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