Question

Bartosiewicz Clinic uses client visits as its measure of activity. During January, the clinic budgeted for 4,100 client-visits, but its actual level of activity was 4,080 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for January:

Data used in budgeting:

	Fixed element per month			Variable element per client-visit
Revenue		-		$	36.10
Personnel expenses	$	28,100		$	12.10
Medical supplies		1,000			6.10
Occupancy expenses		10,000			1.00
Administrative expenses		7,100			0.20
Total expenses	$	46,200		$	19.40

Actual results for January:

Revenue	$	125,800
Personnel expenses	$	70,110
Medical supplies	$	21,110
Occupancy expenses	$	14,100
Administrative expenses	$	7,860

The overall revenue and spending variance (i.e., the variance for net operating income in the revenue and spending variance column on the flexible budget performance report) for January would be closest to:

Multiple Choice

A $9,316 U

B $9,650 F

C $9,650 U

D $9,316 F

Answer 1

Answer- The overall revenue and spending variance (i.e., the variance for net operating income in the revenue and spending variance column on the flexible budget performance report) for January would be closest to= $9316 F (Option D).

Explanation-

BARTOSIEWICZ CLINIC
Revenue & Spending Variance
For the month ended January 31
Particulars		Flexible Budget	Actual Results	Variances	Remark
		$		$
Revenue	4080 client visits*$36.10 per visit	147288	125800	21488	Favorable
Less:-Expenses
Personnel expenses	(4080 client visits*$12.10 per visit)+$28100	77468	70110	-7358	Unfavorable
Medical Supplies	(4080 client visits*$6.10 per visit)+$1000	25888	21110	-4778	Unfavorable
Occupancy expenses	(4080 client visits*$1.00 per visit)+$10000	14080	14100	20	Favorable
Administrative expenses	(4080 client visits*$0.20 per visit)+$7100	7916	7860	-56	Unfavorable
Total Expenses		125352	113180	-12172	Unfavorable
Net Operating Income		21936	12620	9316	Favorable