Rhed 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 3,700 tenant-days, but its actual level of activity was 3,650 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:
Actual results for December:
The activity variance for administrative expenses in December would be closest to:
Definitions:
Marginal Cost Curves
A graphical representation that shows how the marginal cost of producing an additional unit changes with the quantity produced.
AVC
Average Variable Cost, which is the variable cost per unit of output.
Long-run Equilibrium
A state in which all factors of production and costs are variable, leading to a situation where economic profits have been normalized or eliminated due to competition.
Constant Costs
Costs that do not change with the level of output or activity within a certain range.
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