Paulis 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 February, the kennel budgeted for 4,300 tenant-days, but its actual level of activity was 4,280 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for February: Data used in budgeting:
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Paulis 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 February, the kennel budgeted for 4,300 tenant-days, but its actual level of activity was 4,280 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for February:
Data used in budgeting:
| Fixed element per month | Variable element per tenant-day | ||||
| Revenue | - | $ | 30.80 | ||
| Wages and salaries | $ | 3,300 | $ | 6.80 | |
| Food and supplies | 700 | 11.60 | |||
| Facility expenses | 8,300 | 3.80 | |||
| Administrative expenses | 8,100 | 0.20 | |||
| Total expenses | $ | 20,400 | $ | 22.40 | |
Actual results for February:
| Revenue | $ | 108,080 |
| Wages and salaries | $ | 23,530 |
| Food and supplies | $ | 36,793 |
| Facility expenses | $ | 19,280 |
| Administrative expenses | $ | 9,146 |
The overall revenue and spending variance (i.e., the variance for net operating income in the revenue and spending variance column on the flexible budget performance report) for February would be closest to:
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