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

question 51

Multiple Choice

Nicolini 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 October, the kennel budgeted for 2,200 tenant-days, but its actual level of activity was 2,250 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for October: Data used in budgeting: Actual results for October: The administrative expenses in the planning budget for October would be closest to:

• A)$7,636
• B)$7,810
• C)$7,850
• D)$7,840

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Definitions:

Weighted Average Method

An inventory costing method that calculates cost of goods sold and ending inventory based on the weighted average cost of all items available for sale.

Inventory Costs

Expenses associated with ordering, storing, and managing inventory, including cost of goods sold, storage, and insurance.

Finished Goods

Rephrased: Completed production items that are ready for sale but haven't yet been sold, reflecting a key category of inventory for manufacturers.

Weighted-Average Method

An inventory costing method that assigns the same average cost to all units available for sale, calculated as the total cost of goods divided by the total number of units available.