10. Lantagne Clinic uses client-visits as its measure of activity. During May, t

Question

10. Lantagne Clinic uses client-visits as its measure of activity. During May, the clinic budgeted for 3,800 client-visits, but its actual level of activity was 3,820 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for May:

Data used in budgeting:

Actual results for May:

The net operating income in the planning budget for May would be closest to:

A. $16,844

B. $17,040

C. $17,426

D. $16,668

Fixed element per month Variable element per client-visit Revenue $ 38.20 Personnel expenses $ 36,800 $ 11.30 Medical supplies 1,700 5.20 Occupancy expenses 10,200 2.00 Administrative expenses 7,600 0.40 Total expenses $ 56,300 $ 18.90

Explanation / Answer

Net operating income in the planning budget =(3800*38.2)-(3800*18.9)-56300= 17040 Option B is correct

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