Samaritan Clinic (a rural, nonprofit community medical facility) bases its budge
ID: 2524923 • Letter: S
Question
Samaritan Clinic (a rural, nonprofit community medical facility) bases its budgets on the activity measure patient-visits. During November, the clinic planned for an activity level of 36,000 patient-visits, but actually reached 39,000 patient-visits. The clinic uses the following revenue and cost formulas in its budgeting, where q is the number of patient-visits:
Revenue: $2.50q
Wages and salaries: $21,500 + $0.70q
Supplies: $0.40q
Insurance: $6,100
Miscellaneous: $3,700 + $0.40q
The Clinic reported the following actual results for November:
How much of the total revenue variance for the month of November is due to activity variance and how much is due to price variation?
Revenue $100,300 Wages and salaries $45,900 Supplies $15,200 Insurance $6,300 Miscellaneous $17,600Explanation / Answer
Total revenue variance = (36000*2.50)-100300 = 10300 F
Activity variance = (36000-39000)*2.5 = 7500 F
Price variance = (39000*2.5-100300) = 2800 F
So answer is d) 7500 F;2800 F
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