Miao Clinic uses client-visits as its measure of activity.During July, the clinic budgeted for 3, 000 client-visits, but its actual level of activity was 2, 980 client-visits.The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for July: Data used in budgeting: Actual results for July: The administrative expenses in the planning budget for July would be closest to:
A)$6, 492
B)$6, 500
C)$6, 234
D)$6, 192

Question

Miao Clinic uses client-visits as its measure of activity.During July, the clinic budgeted for 3, 000 client-visits, but its actual level of activity was 2, 980 client-visits.The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for July: Data used in budgeting:  Actual results for July:  The administrative expenses in the planning budget for July would be closest to:
A)$6, 492 
B)$6, 500 
C)$6, 234 
D)$6, 192

Quizplus · Accepted Answer

Cost = Fixed cost + (Variable cost per unit × q)
= $5, 300 + ($0.40 × 3, 000)= $6, 500

Miao Clinic Uses Client-Visits as Its Measure of Activity