Ibsen Clinic uses client-visits as its measure of activity. During December, the clinic budgeted for 3,300 client-visits, but its actual level of activity was 3,340 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for December:Data used in budgeting: Actual results for December:
The occupancy expenses in the flexible budget for December would be closest to:
A) $15,565
B) $16,114
C) $15,945
D) $16,030

Question

Ibsen Clinic uses client-visits as its measure of activity. During December, the clinic budgeted for 3,300 client-visits, but its actual level of activity was 3,340 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for December:Data used in budgeting:  Actual results for December:
 The occupancy expenses in the flexible budget for December would be closest to:
A) $15,565 
B) $16,114 
C) $15,945 
D) $16,030

Quizplus · Accepted Answer

Using the flexible budget formula:
Flexible Budget = Budgeted amount + (Actual level of activity - Budgeted level of activity) x Variable cost per unit

For occupancy expenses:
Flexible Budget = $15,000 + ($340 x $35) = $26,900

Therefore, the closest option is B) $16,114.

Ibsen Clinic Uses Client-Visits as Its Measure of Activity