A clinic uses patient-visits as its measure of activity. During July, the clinic

Question

A clinic uses patient-visits as its measure of activity. During July, the clinic budgeted for 2,700 patient-visits, but its actual level of activity was 3,200 patient-visits. The clinic uses the following revenue and cost formulas in its budgeting, where q is the number of patient-visits:

Revenue: $49.60q

Personnel expenses: $31,200 + $15.10q

Medical supplies: $700 + $9.60q

Occupancy expenses: $10,000 + $2.00q

Administrative expenses: $7,000 + $0.20q

The clinic reported the following actual results for July:

Revenue

$165,680

Personnel expenses

$76,190

Medical supplies

$31,790

Occupancy expenses

$15,960

Administrative expenses

$7,600

Can you prepare a flexible budget performance report showing the clinic's planning (static) budget, flexible budget, and relevant variances for July? Label each variance as favorable (F) or unfavorable (U). The illustration posted on the home page may help with this exercise.

You can copy and paste (and use) the following table in your response.

Planning Budget

Volume Variance

Flexible Budget

Flexible Budget Variance

Actual Results

Revenue

153 words

Revenue: $49.60q

Personnel expenses: $31,200 + $15.10q

Medical supplies: $700 + $9.60q

Occupancy expenses: $10,000 + $2.00q

Administrative expenses: $7,000 + $0.20q

Explanation / Answer

Planning Budget Volume Variance Flexible Budget Flexible Budget Variance Actual Results Revenue 133920 24800 F 158720 6960 F 165680 Expenses: Personnel expenses 71970 7550 U 79520 3330 F 76190 Medical supplies 26620 4800 U 31420 370 U 31790 Occupancy expenses 15400 1000 U 16400 440 F 15960 Administrative expenses 7540 100 U 7640 40 F 7600 Total expenses 121530 13450 U 134980 3440 F 131540 Net operating income 12390 11350 F 23740 10400 F 34140

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