Gourley Clinic uses client-visits as its measure of activity. During August, the

Question

Gourley Clinic uses client-visits as its measure of activity. During August, the clinic budgeted for 4,300 client-visits, but its actual level of activity was 4,360 client-visits. The clinic has provided the following data concerning the formulas to be used in its budgeting:

$56,000

$25.30

The activity variance for administrative expenses in August would be closest to:

$30 F

$90 F

$90 U

$30 U

Gourley Clinic uses client-visits as its measure of activity. During August, the clinic budgeted for 4,300 client-visits, but its actual level of activity was 4,360 client-visits. The clinic has provided the following data concerning the formulas to be used in its budgeting:

Explanation / Answer

Answer:

Planning budget : ($7,200 + 0.5*4,300) = $9,350

Flexible Budget: ($7,200 + 0.5*4,360) = $9,380

Activity variance for administrative expenses = ($30) Unfavorable because flexible budget is more than planning budget.

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