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

Question

Kirnon Clinic uses client-visits as its measure of activity. During July, the clinic budgeted for 3,450 client-visits, but its actual level of activity was 3,400 client-visits. The clinic has provided the following data concerning the formulas to be used in its budgeting:

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

MULTIPLE CHOICE

$535 F

$2,975 U

$2,975 F

$535 U

Fixed Variable element element per per month client-visit Revenue $39.50 Personnel expenses Medical supplies Occupancy expenses Administrative expenses Total expenses $35,500 1,500 8,500 5,500 $51,000 $1e.70 7.50 1.50 0.60 $20.30

Explanation / Answer

A. $535 F

Because the flexible budget is less than the planning budget, the variance is favorable (F).

Planning budget($35,500 + $10.70 * 3,450) $72,415 Flexible budget($35,500 + $10.70 * 3,400) $71,880 Activity variance $535

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