Tennies Clinic uses client-visits as its measure of activity. During November, t

Question

Tennies Clinic uses client-visits as its measure of activity. During November, the clinic budgeted for 3,750 client-visits, but its actual level of activity was 3,740 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for November:

Data used in budgeting:

Actual results for November:

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

Fixed element per month Variable element per client-visit Revenue - $ 36.30 Personnel expenses $ 30,400 $ 11.30 Medical supplies 1,650 6.70 Occupancy expenses 8,500 2.80 Administrative expenses 6,800 0.50 Total expenses $ 47,350 $ 21.30

Explanation / Answer

The activity variance for personnel expenses in November would be closest to $113 (Favourable)

Planning budget [$ 30,400 + ($11.30 x 3750)]    $ 72,775

Flexible budget [$ 30,400 + ($11.30 x 3740)]     $ 72,662

Activity variance $ 113 Favourable

Because the flexible budget is less than the planning budget, the variance is favorable (F).

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