Question

Burget Clinic uses client-visits as its measure of activity. During July, the clinic budgeted for 2,100 client-visits, but its actual level of activity was 2,110 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for July:

Use the following data for questions 27-30

Data used in budgeting:

Fixed element Variable element

per month per client-visit

Revenue - $47.10

Personnel expenses $22,700 $16.90

Medical supplies 1,600 6.50

Occupancy expenses 6,900 1.50

Administrative expenses     3,400       0.40

Total expenses $34,600 $25.30

Actual results for July:

Revenue $101,491

Personnel expenses 55,699

Medical supplies 15,895

Occupancy expenses 9,785

Administrative expenses 4,424

The revenue variance for July would be closest to:

		$2,581 F
		$2,110 U
		$2,110 F
		$2,581 U

1. The spending variance for medical supplies in July would be closest to:

   		$580 U
   		$645 U
   		$645 F
   		$580 F

2. he spending variance for occupancy expenses in July would be closest to:

   		$265 F
   		$280 U
   		$280 F
   		$265 U

3. The overall revenue and spending variance (i.e., the variance for net operating income in the revenue and spending variance column on the flexible budget performance report) for July would be closest to:

   		$4,508 F
   		$4,290 U
   		$4,290 F
   		$4,508 U

Answer 1

27
Actual Revenue	101491
Less: Revenue in flexible budget	99381	=2110*47.1
Revenue variance for July	2110	F
$2,110 F is correct option
28
Actual Medical supplies	15895
Less: Medical supplies in flexible budget	15315	=1600+(2110*6.5)
Spending variance for medical supplies	580	U
$580 U is correct option
29
Actual Occupancy expenses	9785
Less: Occupancy expenses in flexible budget	10065	=6900+(2110*1.5)
Spending variance for occupancy expenses	280	F
$280 F is correct option
30
Actual Net operating income	15688	=101491-55699-15895-9785-4424
Less: Net operating income in flexible budget	11398	=2110*(47.1-25.3)-34600
Overall revenue and spending variance	4290	F
$4,290 F is correct option