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

question 1

Multiple Choice

Roye 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 September, the kennel budgeted for 3,300 tenant-days, but its actual level of activity was 3,330 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for September:

Data used in budgeting:
Actual results for September:
-The overall revenue and spending variance (i.e. ,the variance for net operating income in the revenue and spending variance column on the flexible budget performance report) for September would be closest to:

• A)$3,200 F
• B)$3,470 F
• C)$3,200 U
• D)$3,470 U

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Definitions:

Direct Method

A way of allocating service department costs directly to the producing departments without considering services rendered between service departments.

Comparative Balance Sheet

A financial statement that presents the financial position of a company at different points in time side-by-side for comparison.

Cost Of Goods Sold

The immediate expenses linked to the manufacturing of products sold by a business, comprising costs for materials and labor.

Direct Method

An approach in cost accounting that traces costs directly to cost objects without distributing indirect costs.