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Hagel Clinic uses client-visits as its measure of activity. During July, the cli

ID: 2498577 • Letter: H

Question

Hagel Clinic uses client-visits as its measure of activity. During July, the clinic budgeted for 2,300 client-visits, but its actual level of activity was 2,320 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for July:

Data used in budgeting:

                                                                Fixed element per month                     Variable element per client-visit

Revenue                                                 -                                                               $44.60

Personnel expenses                             $23,200                                                   $15.10

Medical supplies                                   900                                                          7.40

Occupancy expenses                           6,500                                                       2.00

Administrative expenses                      4,000                                                       0.20

Total expenses                                      $34,600                                                   $24.70

  

Actual results for July:

Revenue                                                                                 $100,902

Personnel expenses                                                             $60,922

Medical supplies                                                                   $18,648

Occupancy expenses                                                           $11,290

Administrative expenses                                                      $4,594

  

The spending variance for occupancy expenses in July would be closest to:

$150 F

$190 F

$150 U

$190 U

$150 F

$190 F

$150 U

$190 U

Explanation / Answer

Answer: Spending variance=(SR-AR)*Actual hours worked

=($11140*-$11290)

=$150 U

=6500+(2320*2)

=11140