Feiner Clinic uses client-visits as its measure of activity. During December, the clinic budgeted for 2,200 client-visits, but its actual level of activity was 2,220 client-visits. The clinic has provided the following data concerning the formulas to be used in its budgeting:
-The activity variance for personnel expenses in December would be closest to:
A) $4,024 F
B) $466 F
C) $466 U
D) $4,024 U

Question

Feiner Clinic uses client-visits as its measure of activity. During December, the clinic budgeted for 2,200 client-visits, but its actual level of activity was 2,220 client-visits. The clinic has provided the following data concerning the formulas to be used in its budgeting: 
-The activity variance for personnel expenses in December would be closest to:
A) $4,024 F 
B) $466 F 
C) $466 U 
D) $4,024 U

Quizplus · Accepted Answer

To calculate the activity variance for personnel expenses, we need to use the formula:
Activity Variance = (Actual Activity - Budgeted Activity) x Budgeted Rate

From the given data,
Actual Activity = 2,220 client-visits 
Budgeted Activity = 2,200 client-visits 
Budgeted Rate for Personnel Expenses = $2.40 per client-visit

Substituting the values in the formula, we get:
Activity Variance = (2,220 - 2,200) x $2.40 
Activity Variance = 20 x $2.40 
Activity Variance = $48 U

Therefore, the activity variance for personnel expenses in December would be $48 U, which is closest to option C) $466 U.

Feiner Clinic Uses Client-Visits as Its Measure of Activity