Burget Clinic uses client-visits as its measure of activity. During July, the cl

Question

Burget Clinic uses client-visits as its measure of activity. During July, the clinic budgeted for 2,100 client-visits, but its actual level of activity was 2,110 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for July:


Data used in budgeting:

Fixed element per month Variable element per client-visit
Revenue... NONE $47.10
Personal expenses... $22,700 $16.90
Medical supplies... 1,600 6.50
Occupancy expenses... 6,900 1.50
Administrative expenses... 3,400 0.40
Total expenses.. $34600 $25.30

Actual results for July
Revenue... $101,491
Personal expenses... $55,699
Medical supplies... $15,895
Occupancy expenses... $9,785
Administrative expenses... $4,424

The spending variance for medical supplies in July would be closest to:

Explanation / Answer

VOH Spending Variance = ( SR - AR ) × AU SR is the standard variable overhead rate AR is the actual variable overhead rate AU are the actual units of allocation base spending variance for medical supplies =(1,600/2,110 + 6.50 -15,895/2,110 )*2,110 =-580

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