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

question 141

Multiple Choice

Virgen 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 May, the kennel budgeted for 3,700 tenant-days, but its actual level of activity was 3,690 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for May:
Data used in budgeting:
Actual results for May:

-The net operating income in the planning budget for May would be closest to:

• A) $3,905
• B) $3,883
• C) $8,844
• D) $8,920

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Definitions:

Ending Work

The value of goods that are still in production at the end of an accounting period, also known as work-in-process.

Unit Materials Cost

The cost directly associated with the raw materials used in the production of a single unit of a product.

Materials Cost

Materials cost refers to the total expense incurred to procure the raw materials required for production.

Conversion Costs

The sum of labor and manufacturing overhead expenses necessary to convert raw materials into finished products.