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

question 139

Multiple Choice

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 2,000 tenant-days, but its actual level of activity was 2,040 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:
Actual results for March:
The spending variance for facility expenses in March would be closest to:

• A) $78 F
• B) $170 U
• C) $78 U
• D) $170 F

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Definitions:

After-tax Cash Inflow

The net amount of cash that remains after all tax obligations have been subtracted from total revenue.

NPV

Net Present Value; a method used in capital budgeting to analyze the profitability of an investment or project.

CCA Rate

Capital Cost Allowance rate; a method of depreciation used for tax purposes in Canada, allowing a business to deduct the cost of certain assets.

Required Rate of Return

The minimum percentage return an investor expects to achieve by investing in a specific asset or project.