Tennies Clinic uses client-visits as its measure of activity. During November, t

Question

Tennies Clinic uses client-visits as its measure of activity. During November, the clinic budgeted for 3,950 client-visits, but its actual level of activity was 3,940 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for November:

Data used in budgeting:

Actual results for November:

The activity variance for personnel expenses in November would be closest to:

Multiple Choice

$117 F

$117 U

$154 F

$154 U

.

Fixed element per month Variable element per client-visit Revenue - $ 36.70 Personnel expenses $ 30,800 $ 11.70 Medical supplies 1,850 7.10 Occupancy expenses 8,900 3.20 Administrative expenses 7,200 0.50 Total expenses $ 48,750 $ 22.50

Explanation / Answer

Answer : $117 F Planning budget ($30,800 + $11.70× 3,950) = $ 77,015 Flexible budget ($30,800 + $11.70 × 3,940) 76,898 Activity variance $117 Because the flexible budget is less than the planning budget, the variance is favorable (F)

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