Question

Werber Clinic uses client-visits as its measure of activity. During January, the clinic budgeted for 2,700 client-visits, but its actual level of activity was 2,730 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for January:

Use the following data for questions 24-26

Data used in budgeting:

Fixed element Variable element

per month per client-visit

Revenue - $33.60

Personnel expenses $22,100 $8.70

Medical supplies 1,100 6.60

Occupancy expenses 5,600 1.60

Administrative expenses     3,700       0.40

Total expenses $32,500 $17.30

Actual results for January:

Revenue $93,408

Personnel expenses 46,251

Medical supplies 19,348

Occupancy expenses 9,508

Administrative expenses 4,772

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

		$661 U
		$261 U
		$261 F
		$661 F

The activity variance for administrative expenses in January would be closest to:

		$12 F
		$8 F
		$12 U
		$8 U

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

		$2,019 U
		$2,019 F
		$489 F
		$489 U

Answer 1

24
Personnel expenses in flexible budget	45851	=22100+(2730*8.7)
Less: Personnel expenses in static budget	45590	=22100+(2700*8.7)
Activity variance for personnel expenses	261	U
$261 U is correct option
25
Administrative expenses in flexible budget	4792	=3700+(2730*0.4)
Less: Administrative expenses in static budget	4780	=3700+(2700*0.4)
Activity variance for administrative expenses	12	U
$12 U is correct option
26
Net operating income in flexible budget	11999	=2730*(33.6-17.3)-32500
Less: Net operating income in static budget	11510	=2700*(33.6-17.3)-32500
Activity variance for net operating income	489	F
$489 F is correct option