Doubleday Clinic uses client-visits as its measure of activity. During June, the

Question

Doubleday Clinic uses client-visits as its measure of activity. During June, the clinic budgeted for 3,200 client visits, but its actual level of activity was 3,180 client-visits. The clinichas provided the following data concerning the formulas to be used in its budgeting for June:

Revenue.........Fixed -0-.......Var.element per client-visit.........$31.20

Personal Exp....Fixed...$31,800....Var. element per client visit....$8.10

Medical Supplies....Fixed....1,700.....Var. element per client visit......4.20

Occupancy exp......Fixed.....7,100....Var.element per client visit......1.10

Administrative Exp.......Fixed.....3,200....Var. element per client visit.....0.10

Total Expenses.....Fixed$43,800.......Var. element per client visit $13.50

The net operating income in the planning budget for June would be closest to...........

Explanation / Answer

PB = 3,200

FB = 3,180

------------------------------------------

- 20 UNITS .... ACTIVITY VARIATION

--------------------------------------------

SP = $31.20

VC = $13.50

---------------

CM = SP -VC =

= $31.20 - $13.50

= $ 17.7

20 UNITS @ $ 17.7 =

= $ 354 F

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