Ruetz Clinic uses client-visits as its measure of activity. During November, the clinic budgeted for 2,500 client-visits, but its actual level of activity was 2,520 client-visits. The clinic has provided the following data concerning the formulas to be used in its budgeting:

-The occupancy expenses in the flexible budget for November would be closest to:
A)$11,016
B)$11,224
C)$11,200
D)$11,193

Question

Ruetz Clinic uses client-visits as its measure of activity. During November, the clinic budgeted for 2,500 client-visits, but its actual level of activity was 2,520 client-visits. The clinic has provided the following data concerning the formulas to be used in its budgeting:

-The occupancy expenses in the flexible budget for November would be closest to:

-The occupancy expenses in the flexible budget for November would be closest to:
A)$11,016 
B)$11,224 
C)$11,200 
D)$11,193

Quizplus · Accepted Answer

The flexible budget formula for occupancy expenses is:
Fixed portion + (Variable portion per occupancy * Number of Occupancies)

Fixed portion = $7,500
Variable portion per occupancy = $4.80
Number of Occupancies = 2,200

Therefore, 
Occupancy Expenses = $7,500 + ($4.80 * 2,200)
Occupancy Expenses = $11,224

Hence, the answer is option B.

Ruetz Clinic Uses Client-Visits as Its Measure of Activity