Stivason Clinic uses client-visits as its measure of activity. During September, the clinic budgeted for 3,300 client-visits, but its actual level of activity was 3,290 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for September:

Data used in budgeting:

Actual results for September:
-The activity variance for personnel expenses in September would be closest to:
A)$605 U
B)$605 F
C)$85 F
D)$85 U

Question

Stivason Clinic uses client-visits as its measure of activity. During September, the clinic budgeted for 3,300 client-visits, but its actual level of activity was 3,290 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for September:

Data used in budgeting:

Actual results for September:

-The activity variance for personnel expenses in September would be closest to:

Data used in budgeting:

Actual results for September: 
-The activity variance for personnel expenses in September would be closest to:
A)$605 U 
B)$605 F 
C)$85 F 
D)$85 U

Quizplus · Accepted Answer

To find the activity variance, we need to subtract the flexible budget amount (based on actual activity) from the actual amount spent.

Personnel expenses in September:
Actual amount spent = $10,400
Flexible budget amount based on actual activity = $10,485 ($22.50 x 465 hours)

Therefore, activity variance = actual amount spent - flexible budget amount
= $10,400 - $10,485
= -$85

Since the actual amount spent is less than the flexible budget amount, the activity variance is unfavorable (U), and the absolute value of the variance is $85.

Thus, the best choice is C, $85 F.

Stivason Clinic Uses Client-Visits as Its Measure of Activity