Pearse Kennel uses tenant-days as its measure of activity; an animal housed in the kennel...
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Accounting
| Pearse 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 5,000 tenant-days, but its actual level of activity was 5,020 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for December: |
Data used in budgeting:
| Fixed element per month | Variable element per tenant-day | |
| Revenue | $31.50 | |
| Wages and salaries | $4,000 | $7.50 |
| Food and supplies | 600 | 12.30 |
| Facility expenses | 9,000 | 4.50 |
| Administrative expenses | 8,800 | 0.30 |
| Total expenses | $22,400 | $24.60 |
Actual results for December:
| Revenue | $108,780 |
| Wages and salaries | $23,600 |
| Food and supplies | $36,800 |
| Facility expenses | $19,350 |
| Administrative expenses | $9,160 |
The net operating income in the flexible budget for December would be closest to:
$12,238
$12,100
$19,870
$19,776
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