Wesolick Clinic uses client-visits as its measure of activity.During August, the clinic budgeted for 2, 900 client-visits, but its actual level of activity was 2, 870 client-visits.The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for August: Data used in budgeting: Actual results for August: The activity variance for personnel expenses in August would be closest to:
A)$2, 104 U
B)$384 U
C)$384 F
D)$2, 104 F

Question

Wesolick Clinic uses client-visits as its measure of activity.During August, the clinic budgeted for 2, 900 client-visits, but its actual level of activity was 2, 870 client-visits.The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for August: Data used in budgeting:  Actual results for August:  The activity variance for personnel expenses in August would be closest to:
A)$2, 104 U 
B)$384 U 
C)$384 F 
D)$2, 104 F

Quizplus · Accepted Answer

Activity variance for personnel expenses = (Actual personnel expenses - Budgeted personnel expenses) 
Actual personnel expenses = Actual client-visits * Personnel cost per client-visit = 2,870 * 44 = $126,280 
Budgeted personnel expenses = Budgeted client-visits * Personnel cost per client-visit = 2,900 * 44 = $127,600 
Activity variance for personnel expenses = $126,280 - $127,600 = $1,320 F

Therefore, the closest answer choice is C) $384 F, as it is the only option that is within the range of the activity variance calculated above.

Wesolick Clinic Uses Client-Visits as Its Measure of Activity