Question

Rippelmeyer 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 June, the kennel budgeted for 3,600 tenant-days, but its actual level of activity was 3,550 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for June:

Fixed element per month Variable element per tenant day
Revenue _____________ $34,80
Wages and salaries $3900 $6
Expendables 400 9.7
Facility expenses 9400 4.5
Administrative expenses 7400 0.20
Total expenses 21,100 20.40

Actual results for May:
Revenue $73540
Wages and salaries 16170
Expendables 19735
Facility expenses 18125
Administrative expenses 7600

The net operating income in the planning budget for May would be closest to:
a. $9,140
b. $11,626
c. $12,200
d. $8,420

The net operating income in the flexible budget for May would be closest to:
a. $9,140
b. $8,420
c. $11,626
d. $12,200

Answer 1

Rippelmeyer Kennel

The net operating income in the planning budget for May would be closest to:

= $30,740.

Step-by-step explanation:

a) Data and Calculations:

Budgeted tenant-days = 3,600

Actual tenant-days = 3,550

Actual results for May:

Revenue $73,540

Wages and salaries $16,170

Expendables 19,735

Facility expenses 18,125

Administrative expenses 7,600

Total expenses $61,630

Net operating income $11,910

Fixed element Variable element Total

per month per tenant day

Revenue $34.80 $125,280

Wages and salaries $3,900 $6.00 $25,500

Expendables 400 9.70 35,320

Facility expenses 9,400 4.50 25,600

Administrative expenses 7,400 0.20 8,120

Total expenses 21,100 20.40 $94,540

Net Operating Income $30,740