Question

Fager Clinic uses client-visits as its measure of activity. During February, the clinic budgeted for 2,200 client-visits, but its actual level of activity was 2,250 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for February:

	Fixed element per month			Variable element per client-visit
Revenue		-		$	68.20
Personnel expenses	$	32,300		$	21.50
Medical supplies		1,200			12.50
Occupancy expenses		9,700			3.40
Administrative expenses		5,000			0.10
Total expenses	$	48,200		$	37.50

Actual results for February:

Revenue	$	156,210
Personnel expenses	$	80,445
Medical supplies	$	30,105
Occupancy expenses	$	16,800
Administrative expenses	$	5,015

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

Answer 1

Activity variance for personnel expense = Planning budget expense-Flexible budget expense

                                                                 = (2200*21.50+32300)-(2250*21.50+32300)

Activity variance for personnel expense = 1075 U