Question

Guareno Clinic uses client-visits as its measure of activity. During December, the clinic budgeted for 4,500 client-visits, but its actual level of activity was 4,430 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for December:

Data used in budgeting:

	Fixed element per month			Variable element per client-visit
Revenue		-		$	45.10
Personnel expenses	$	36,300		$	13.70
Medical supplies		2,000			5.70
Occupancy expenses		12,000			1.80
Administrative expenses		5,800			0.30
Total expenses	$	56,100		$	21.50

Actual results for December:

Revenue	$	198,505
Personnel expenses	$	95,975
Medical supplies	$	26,775
Occupancy expenses	$	19,420
Administrative expenses	$	7,255

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

Multiple Choice

$21 U

$105 F

$105 U

$21 F

Answer 1

Correct answer---- $105 U

	Budgeted	Actual
Activity	4,500	4,430
Variable element per activity	$                   0.30
Total Variable cost	$           1,350.00
Fixed cost	$           5,800.00	$         5,800.00
Total cost	$           7,150.00	$         7,255.00
Variance (7255-7150)	$ 105.00 Unfavorable