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

question 233

Multiple Choice

Paulis 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 February, the kennel budgeted for 3,900 tenant-days, but its actual level of activity was 3,880 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for February:Data used in budgeting: Actual results for February:
The activity variance for net operating income in February would be closest to:

• A) $2,723 F
• B) $180 U
• C) $180 F
• D) $2,723 U

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Definitions:

Job A578

A specific project or task within an organization, identified by the code A578 for tracking and cost allocation purposes.

Predetermined Manufacturing Overhead

The estimated cost of manufacturing overhead assigned to each unit of production, based on a predetermined rate.

Machine-hours

A measure of the amount of time a machine is used for production, often used in allocating manufacturing overhead based on usage.

Markup

The amount added to the cost price of goods, to cover overhead and profit, determining the selling price.