17 Meyers Medical Clinic measures its activity in terms of patient-visits. Last

Question

17 Meyers Medical Clinic measures its activity in terms of patient-visits. Last month, the budgeted level of activity was 1,530 patient-visits, but the actual level of activity was 1,490 patient-visits The cost formula for administrative expenses is $4.00 per patient-visit plus $15,300 per month. The actual administrative expense was $19,810. In the clinic's flexible budget performance report for last month, the spending variance for administrative expenses was: A. S 820 F B. S160 F c s 1,450 F D. S1,610F E. None of the above

Explanation / Answer

C. $1,450 F

Because the actual expense is lower than the flexible budget, the variance is favorable (F).

Actual results $19,810 Flexible budget($15,300 + $4.00 × 1,490) $21,260 Spending variance $1,450

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