Question

Kaina Clinic uses client-visits as its measure of activity. During May, the clinic budgeted for 3,000 client-visits, but its actual level of activity was 2,970 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for May:

	Fixed element per month			Variable element per client-visit
Revenue		-		$	25.80
Personnel expenses	$	20,200		$	7.10
Medical supplies		900			4.60
Occupancy expenses		5,500			0.70
Administrative expenses		3,500			0.20
Total expenses	$	30,100		$	12.60

Actual results for May:

Revenue	$	78,246
Personnel expenses	$	42,647
Medical supplies	$	15,002
Occupancy expenses	$	7,289
Administrative expenses	$	4,294

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

Answer 1

Activity variance for personnel expense = Static budget expense-flexible budget expense

                                                                  = (3000*7.10+20200)-(2970*7.10+20200)

Activity variance for personnel expense = 213 F