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:

Accumulated Depreciation

The total amount of depreciation expense that has been recorded against a fixed asset since it was acquired, reflecting its use and wear over time.

Investing Activity

A category in financial statements that represents cash flows related to the purchase or sale of long-term assets or investments.

Statement Of Cash Flows

A financial statement that highlights the major activities that impact cash flows and, hence, affect the overall cash balance.

Sale Of Equipment

The process of selling off business assets, such as machinery or office equipment, usually to generate cash.