Kawamura 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 2,300 tenant-days, but its actual level of activity was 2,320 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) $10,156
B) $9,890
C) $7,309
D) $7,184

First, we need to calculate the flexible budget for 2,320 tenant-days:

Variable expenses per tenant-day:
Food: $8.70
Supplies: $1.20
Total variable expenses per tenant-day: $9.90

Fixed expenses:
Salaries: $3,800
Rent: $1,400
Insurance: $600
Total fixed expenses: $5,800

Flexible budget: (2,320 tenant-days)
Variable expenses: 2,320 x $9.90 = $22,968
Fixed expenses: $5,800
Total expenses: $28,768

Now we can calculate the net operating income in the planning budget by subtracting the total expenses from the total revenue in the planning budget:

Planning budget revenue: 2,300 x $30.00 = $69,000
Planning budget total expenses: $24,800 (variable expenses: 2,300 x $9.90 + fixed expenses: $5,500)
Planning budget net operating income: $69,000 - $24,800 = $44,200

Finally, we can calculate the net operating income in the flexible budget by subtracting the total expenses from the total revenue in the flexible budget:

Flexible budget revenue: 2,320 x $30.00 = $69,600
Flexible budget total expenses: $28,768 (variable expenses: 2,320 x $9.90 + fixed expenses: $5,800)
Flexible budget net operating income: $69,600 - $28,768 = $40,832

Therefore, the net operating income in the planning budget for December would be closest to $9,890 (option B), which is the net operating income in the planning budget when the kennel anticipated 2,300 tenant-days.