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

question 231

Multiple Choice

Sorrow 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 November, the kennel budgeted for 2,300 tenant-days, but its actual level of activity was 2,350 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for November:

Data used in budgeting:

Actual results for November:




-The activity variance for wages and salaries in November would be closest to:

• A)$310 U
• B)$310 F
• C)$590 U
• D)$590 F

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Definitions:

Allowance for Doubtful Accounts

An estimation of the amount of credit sales that are expected not to be collected, representing a reserve for potential bad debts.

Notes Receivable

Legally enforceable claims for money owed to a business by its customers or clients, typically evidenced by a written promise to pay.

Formal Instruments of Credit

Legal documents that acknowledge debt and specify terms of repayment, such as notes payable or bonds.

Accounts Receivable Turnover

A financial ratio that measures how efficiently a company collects revenue by comparing net credit sales to the average accounts receivable.