Grohs 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 2,500 tenant-days, but its actual level of activity was 2,530 tenant-days. The kennel has provided the following data concerning the formulas to be used in its budgeting: The food and supplies in the flexible budget for December would be closest to:

A) $30,000
B) $30,348
C) $29,791
D) $30,510

Question

Grohs 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 2,500 tenant-days, but its actual level of activity was 2,530 tenant-days. The kennel has provided the following data concerning the formulas to be used in its budgeting:

The food and supplies in the flexible budget for December would be closest to:

A) $30,000
B) $30,348
C) $29,791
D) $30,510

Abhishek Kalarikkal Sukumar · Accepted Answer

Final Answer : B, Explanation :  Using the formula provided in the data:Flexible budget = Budgeted cost + (Actual level of activity - Budgeted activity) x Budgeted cost per unitWe can calculate the flexible budget for food and supplies:Flexible budget = $27,500 + (2,530 - 2,500) x $0.66Flexible budget = $27,500 + 19.8Flexible budget = $30,348Therefore, the closest option is B) $30,348.

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