Ruetz Clinic uses client-visits as its measure of activity. During November, the

Question

Ruetz Clinic uses client-visits as its measure of activity. During November, the clinic budgeted for 2,500 client-visits, but its actual level of activity was 2,520 client-visits. The clinic has provided the following data concerning the cormulas to be used in its budgeting:

Variable element per client-visit

$44.00

1.20

The net operating income in the flexible budget for November would be closest to:

A. $9,461

B. $12,950

C. $9,312

D. $13,376

Please show work.

Fixed Element per month

Variable element per client-visit

Revenue

$44.00

Personnel Expenses $26,200 $12.50 Medical supplies 1,200 8.70 Occupancy Expenses 8,200

1.20

Administrative Expenses 4,700 0.30 Total Expenses $40,300 $22.70

Explanation / Answer

D. $13,376

Net operating income = $21.30 * 2,520 - $40,300 = $13,376

Revenue per client-visit $44.00 Total variable expense per client-visit $22.70 Contribution margin per client-visit $21.30 Total fixed expense $40,300

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