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

question 80

Multiple Choice

Hamp 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 December, the kennel budgeted for 3,000 tenant-days, but its actual level of activity was 3,050 tenant-days. The kennel has provided the following data concerning the formulas to be used in its budgeting:
-The net operating income in the planning budget for December would be closest to:

• A)$13,420
• B)$12,020
• C)$12,984
• D)$11,500

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Definitions:

Total Factory Overhead Cost

Total factory overhead cost includes all indirect costs associated with manufacturing, such as utilities, maintenance, and salaries of non-direct labor, that are not directly tied to the production of specific goods.

Direct Labor

The labor costs associated with workers who are directly involved in the production of goods or services.

Indirect Labor

The wages paid to employees who are not directly involved in the production of goods, such as supervisors and maintenance workers.

Product Cost

The total expense incurred in creating a product, including raw materials, labor, and overhead costs.