Bartosiewicz Clinic uses client-visits as its measure of activity. During Januar

Question

Bartosiewicz Clinic uses client-visits as its measure of activity. During January, the clinic budgeted for 4,100 client-visits, but its actual level of activity was 4,080 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for January:

Data used in budgeting:

Fixed element per month / Variable element per client-visit

Revenue - / $ 36.10

Personnel expenses $ 28,100 / $ 12.10

Medical supplies 1,000 / 6.10

Occupancy expenses 10,000 / 1.00

Administrative expenses 7,100 / 0.20

Total expenses $ 46,200 / $ 19.40

Actual results for January:

Revenue $ 125,800

Personnel expenses $ 70,110

Medical supplies $ 21,110

Occupancy expenses $ 14,100

Administrative expenses $ 7,860

The activity variance for net operating income in January would be closest to:

Multiple Choice

A, $334 U

B, $334 F

C, $9,650 U

D, $9,650 F

Explanation / Answer

Net operating income under static budget = ((36.10-19.40)*4100)-46200 = 22270

Net operating income under flexible budget = ((36.10-19.40)*4080)-46200 = 21936

Activity variance = 22270-21936 = 334 U

so answer is a) 334 U

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