Question

Davis Clinic uses patient-visits as its measure of activity. The clinic has provided the following report:

	Planning budget	Actual Results	Variances
Patient visits	2,000	2,400
Revenue ($58.10)q	$116,200	$142,080	$9,050 F
Expenses:
Personnel expenses ($30,400 + $17.40q)	$65,200	74,250	9,050 U
Medical supplies ($1,300 + $9.60q)	$20,500	$24,670	$4,170 U
Occupancy expenses ($9,000 + $1.50q)	$12,800	$14,020	$1,220 U
Administrative expenses ($6,200 + $0.30q)	$6,800	$6,860	$60 U
Total expense	$105,300	$119,800	$14,500 U
Net operating income	$10,900	$22,280	$11,380 F

1. Compute the revenue and spending variances for Davis Clinic for the month ended December 31st. Label each variance as favorable (F) or unfavorable (U).

Answer 1

Revenue and spending variance

	Flexible budget	Actual Results	Variances
Patient visits	2,400	2,400
Revenue	139440	$142,080	2640 F
Expenses:
Personnel expenses	$72160	74,250	2090 U
Medical supplies	24340	$24,670	330 U
Occupancy expenses	$12,600	$14,020	$1,420 U
Administrative expenses	$6,920	$6,860	$60 F
Total expense	$116020	$119,800	$3780 U
Net operating income	23420	$22,280	$1140 U