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

question 487

Multiple Choice

Knapper 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 January, the kennel budgeted for 2,700 tenant-days, but its actual level of activity was 2,740 tenant-days. The kennel has provided the following data concerning the formulas to be used in its budgeting: The net operating income in the flexible budget for January would be closest to:

• A) $9,414
• B) $8,350
• C) $8,600
• D) $8,970

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Definitions:

Adjusting Entry Process

The method of updating the accounts at the end of an accounting period by recording accruals, deferrals, estimations, and period costs to ensure accurate financial statements.

Errors

Mistakes or inaccuracies in financial records or transactions.

Unearned Revenues

Money received by a company for goods or services yet to be delivered or performed, considered a liability until fulfilled.

Depreciation

The systematic allocation of the cost of a tangible asset over its useful life, reflecting the loss of value due to age, wear, and tear, or obsolescence.