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

question 127

Multiple Choice

Pearse 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 2,980 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for December:

Data used in budgeting:

Actual results for December:

-The activity variance for net operating income in December would be closest to:

• A)$640 F
• B)$640 U
• C)$200 U
• D)$200 F

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Definitions:

Gain

The financial benefit obtained when the selling price of an asset exceeds its purchase price.

Assumes Liability

Taking on the legal responsibility for a debt or obligation.

Realized Gain

Profit from the sale of an asset or investment when the selling price exceeds the original purchase price.

Ordinary Income

Income earned through standard operations, including wages, salaries, commissions, and interest income, typically taxed at normal rates.