Werber Clinic uses client visits as its measure of activity. During January, the

Question

Werber Clinic uses client visits as its measure of activity. During January, the clinic budgeted for 2,700 client visits, but its actual level of activity was 2,730 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 Variable element
per month per client-visit
Revenue ___-___ $33.60
Personnel expenses $22,100 $8.70
Medical supplies 1,100 6.60
Occupancy expenses 5,600 1.60
Administrative expenses 3,700 0.40
Total expenses $32,500 $17.30

Actual results
for January:
Revenue $93,408
Personnel expenses $46,251
Medical supplies $19,348
Occupancy expenses $9,508
Administrative expenses $4,772



The activity variance for administrative expenses in January would be closest to

A. $8 U.

B. $12 F.

C. $12 U.

D. $8 F.

Explanation / Answer

The activity variance for administrative expenses in January would be closest to B.12 (F) Standard Administrative expenses Fixed 3,700 variable 0.40 per client cost of 2730 clients = 3700 + 2730 x 0.40 = 4,792 Actual cost = 4,772 Variance = 20 (F)

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