Hagel Clinic uses client-visits as its measure of activity. During July, the cli
ID: 2498574 • Letter: H
Question
Hagel Clinic uses client-visits as its measure of activity. During July, the clinic budgeted for 2,300 client-visits, but its actual level of activity was 2,320 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 - $44.60
Personnel expenses $23,200 $15.10
Medical supplies 900 7.40
Occupancy expenses 6,500 2.00
Administrative expenses 4,000 0.20
Total expenses $34,600 $24.70
Actual results for July:
Revenue $100,902
Personnel expenses $60,922
Medical supplies $18,648
Occupancy expenses $11,290
Administrative expenses $4,594
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 July would be closest to:
$6,120 U
$5,722 F
$5,722 U
$6,120 F
$6,120 U
$5,722 F
$5,722 U
$6,120 F
Explanation / Answer
Flexible Budget (Fixed + variable) Actual results Revenue and spending variance workings: Revenue 103,472 100,902 (2,570) 44.6*2320 Expenses - Personnel expenses 58,232 60,922 2,690 23200+15.1*2320 Medical supplies 18,068 18,648 (580) 900+7.4*2320 Occupancy expenses 11,140 11,290 150 6500+2*2320 Administrative expenses 4,464 4,594 (130) 4000+0.2*2320 Total Exp 91,904 95,454 3,550 Net operating income 11,568 5,448 $6,120 U
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