Murphree Clinic uses client-visits as its measure of activity. During April, the clinic budgeted for 3,300 client-visits, but its actual level of activity was 3,350 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for April:
-The overall revenue and spending variance (i.e., the variance for net operating income in the revenue and spending variance column on the flexible budget performance report) for April would be closest to:
A) $5,390 F
B) $6,265 U
C) $5,390 U
D) $6,265 F

Question

Murphree Clinic uses client-visits as its measure of activity. During April, the clinic budgeted for 3,300 client-visits, but its actual level of activity was 3,350 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for April: 
-The overall revenue and spending variance (i.e., the variance for net operating income in the revenue and spending variance column on the flexible budget performance report) for April would be closest to:
A) $5,390 F 
B) $6,265 U 
C) $5,390 U 
D) $6,265 F

Quizplus · Accepted Answer

The overall revenue and spending variance is calculated by subtracting the budgeted net operating income from the actual net operating income. In this case, the budgeted net operating income is $11,655 and the actual net operating income is $5,390. Therefore, the overall revenue and spending variance is $5,390 U.

Murphree Clinic Uses Client-Visits as Its Measure of Activity