Vanderhyde Kennel uses tenantdays as its measure of activity

Vanderhyde 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 4,800 tenant-days, but its actual level of activity was 4,870 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 Varlable element per tenant-day 34.00 8.70 14.80 6.20 1.90 31.60 Fixed element per month Revenue Wages and salaries Food and supplies Facility expenses Administrative expenses Total expenses 4,350 $ 2,470 11,650 9,650 28,120 $ Actual results for May: Revenue Wages and salarles Foods and supplies Facility expenses Administrative expenses $ 170,020 $48,214 $73,051 $40,714 $18,578 The wages and salaries in the planning budget for May would be closest to: O $47,323 $46,110 O $48.214 $46,398

Solution

Budget are prepared by organisation in order to know the costs that can be incurred if the production will be conducted.

Budget help the organisation to compare it with the actual cost incurred and to calculate variances.

Budgets also help to take corrective action if required.

As per the information budgeted Wages and salaries for may

= Variable expenses + fixed expenses

= 4800*8.70 + 4350

= 46,110

Option B is correct