Question

Kirnon Clinic uses client-visits as its measure of activity. During July, the clinic budgeted for 2,000 client-visits, but its actual level of activity was 2,010 client-visits. The clinic has provided the following data concerning the formulas to be used in its budgeting:

	Fixed element per month			Variable element per client-visit
Revenue		-		$	43.70
Personnel expenses	$	26,100		$	12.10
Medical supplies		1,000			6.30
Occupancy expenses		6,800			1.60
Administrative expenses		3,000			0.20
Total expenses	$	36,900		$	20.20

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

Multiple Choice

• $2 U

• $162 F

• $2 F

• $162 U

Answer 1

Activity variance for administrative expenses = Budgeted - Flexible = [(2000*0.20)+3000] - [(2010*0.20)+3000] = 3400 - 3402 = 2 U