Question

Bartosiewicz Clinic uses client-visits as its measure of activity. During January, the clinic budgeted for 5,100 client-visits, but its actual level of activity was 5,120 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for January:

Data used in budgeting:

	Fixed element per month	Variable element per client-visit
Revenue	$ 0	$ 37.10
Personnel expenses	$ 29,100	$ 13.10
Medical supplies	2,000	7.10
Occupancy expenses	11,000	1.00
Administrative expenses	6,600	0.20
Total expenses	$ 48,700	$ 21.40

Actual results for January:

Revenue	$ 150,100
Personnel expenses	$ 70,070
Medical supplies	$ 20,222
Occupancy expenses	$ 14,080
Administrative expenses	$ 7,560

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 January would be closest to:

rev: 06_30_2020_QC_CS-208650

Multiple Choice

• $6,484 U

• $6,484 F

• $6,798 U

• $6,798 F

Answer 1

• Correct Answer = Option #2: $ 6484 F

Revenue in flexible budget	$189,952	[5120 actual visit x $ 37.10]
Variable expenses per visit in Flexible Budget	$21.40
Total Variable expenses in Flexible budget	$109,568	[5120 x $ 21.10]
Total Fixed expenses in Flexible Budget	$48,700
Net Operating Income in Flexible Budget	$31,684	[$189952 - 48700 - 31684]
Net Operating Income in Actual	$38,168	[$150100-70070-20222-14080-7560]
Overall Revenue and Spending Variance	$6,484	Favourable [because actual net income is MORE than flexible budget]