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

question 288

Multiple Choice

Neighbors 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 April, the kennel budgeted for 3,000 tenant-days, but its actual level of activity was 2,960 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for April: Data used in budgeting:
Actual results for April:
The activity variance for net operating income in April would be closest to:

• A) $126 F
• B) $126 U
• C) $364 F
• D) $364 U

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Definitions:

Average Inventory

The mean amount of inventory held by a business over a specific period of time, calculated to assess inventory management efficiency.

Ending Inventory

The total value of all merchandise that a company has not sold at the end of an accounting period.

Beginning Inventory

The amount of merchandise prepared for sale at the start of a fiscal period.

Average Inventory

The mean value of the inventory over a specific time period, calculated by averaging the inventory levels at various times.