(12 Points) Stivason Clinic uses client-visits as its measure expenses. For budg
ID: 2802109 • Letter: #
Question
(12 Points) Stivason Clinic uses client-visits as its measure expenses. For budgeting, Stivason estimates that mon plus $8.50 per client-visit of activity. Personnel expense is one of the thly personnel expense will be $23,000 ivason estimated the level of activity for the month to be 6,600 client-visits. The actual number of client-visits was 6,000. The actual cost for personnel expense was $100,000. REQUIRED 2 Calculate the amount of personnel expense that would appear in the Flexible Budget. 4] Calculate the amount of the Spending Variance for personnel expense. Calculate the amount of personnel expense that would appear in the Planning BudgetExplanation / Answer
Answer 1.
Planning Budget:
Expected Number of client-visit = 6,600
Personnel Expense = $23,000 + $8.50 per client-visit
Planning Budget Personnel Expense = $23,000 + $8.50 * 6,600
Planning Budget Personnel Expense = $79,100
Answer 2.
Flexible Budget:
Actual Number of client-visit = 6,000
Personnel Expense = $23,000 + $8.50 per client-visit
Flexible Budget Personnel Expense = $23,000 + $8.50 * 6,000
Flexible Budget Personnel Expense = $74,000
Answer 3.
Activity Variance for Personnel Expense = Planning Budget Personnel Expense - Flexible Budget Personnel Expense
Activity Variance for Personnel Expense = $79,100 - $74,000
Activity Variance for Personnel Expense = $5,100 Favorable
Answer 4.
Spending Variance for Personnel Expense = Actual Cost for Personnel Expense - Flexible Budget Personnel Expense
Spending Variance for Personnel Expense = $100,000 - $74,000
Spending Variance for Personnel Expense = $26,000 Unfavorable
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