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Asked by Laura Juarez on Jul 09, 2024

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Virgen 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 May, the kennel budgeted for 3,700 tenant-days, but its actual level of activity was 3,690 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for May:Data used in budgeting Virgen 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 May, the kennel budgeted for 3,700 tenant-days, but its actual level of activity was 3,690 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for May:Data used in budgeting Actual results for May: The administrative expenses in the planning budget for May would be closest to: A) $8,409 B) $8,386 C) $8,280 D) $8,276 Actual results for May:
Virgen 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 May, the kennel budgeted for 3,700 tenant-days, but its actual level of activity was 3,690 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for May:Data used in budgeting Actual results for May: The administrative expenses in the planning budget for May would be closest to: A) $8,409 B) $8,386 C) $8,280 D) $8,276 The administrative expenses in the planning budget for May would be closest to:

A) $8,409
B) $8,386
C) $8,280
D) $8,276

Administrative Expenses

Costs that are not directly tied to the production of goods or services, including salaries of office staff, utilities, and rent.

Tenant-Days

A measure used in the hospitality or rental industry, representing the total number of days for which a property was rented out by tenants.

Planning Budget

A budget prepared for a planned level of activity, often for the purpose of setting goals or objectives for revenue and expenses over a period of time.

  • Unravel the concept of flexible budgeting and its capacity to recalibrate in response to shifts in workload levels.
  • Understand the influence of fixed and variable costs on the orchestration and control of budgetary processes.
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TT
The Tuton FamilyJul 14, 2024
Final Answer :
C
Explanation :
We can use the following formula to calculate the budgeted administrative expenses:
Budgeted administrative expenses = Budgeted variable cost per unit of activity x Actual level of activity + Budgeted fixed expenses
From the data provided:
Budgeted variable cost per unit of activity = $1.50
Actual level of activity = 3,690 tenant-days
Budgeted fixed expenses = $4,800
Plugging in the numbers:
Budgeted administrative expenses = $1.50 x 3,690 + $4,800 = $10,035
Therefore, the closest answer choice is C) $8,280.

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