Question

Laizure Clinic uses patient-visits as its measure of activity. The clinic bases its budgets on the following information: Revenue should be $68.90 per patient-visit. Personnel expenses should be $37,000 per month plus $17.10 per patient-visit. Medical supplies should be $3,300 per month plus $12.50 per patient-visit. Occupancy expenses should be $9,700 per month plus $8.50 per patient-visit. Administrative expenses should be $5,200 per month plus $6.60 per patient-visit.

The clinic reported the following actual results for November:

Patient-visits		2,930
Revenue	$	229,240
Personnel expenses	$	95,320
Medical supplies	$	45,040
Occupancy expenses	$	24,150
Administrative expenses	$	14,550

Required:

Prepare a report showing the clinic's revenue and spending variances for November. Label each variance as favorable (F) or unfavorable (U). (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

Answer 1

Laizure Clinic
Revenue and Spending Variances
For the Month Ended November 30
	Actual Results	Flexible Budget	Revenue and Spending Variances
Patient-visits	2930	2930
Revenue	229240	201877	27363	F
Expenses:
Personnel expenses	95320	87103	8217	U
Medical supplies	45040	39925	5115	U
Occupancy expenses	24150	34605	10455	F
Administrative expenses	14550	24538	9988	F
Total expense	179060	186171	7111	F
Net operating income	50180	15706	34474	F

Working:

Flexible budget:

Revenue = 2930 x $68.90 = $201877

Personnel expenses = $37000 + (2930 x $17.10) = $87103

Medical supplies = $3300 + (2930 x $12.50) = $39925

Occupancy expenses = $9700 + (2930 x $8.50) = $34605

Administrative expenses = $5200 + (2930 x $6.60) = $24538