Lantagne Clinic uses client-visits as its measure of activity. During May, the clinic budgeted for 3,800 client-visits, but its actual level of activity was 3,820 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for May: Data used in budgeting: Actual results for May: The overall revenue and spending variance (i.e., the variance for net operating income in the revenue and spending variance column on the revenue and spending variances report) for May would be closest to:
A)$284 U
B)$670 F
C)$670 U
D)$284 F

Question

Lantagne Clinic uses client-visits as its measure of activity. During May, the clinic budgeted for 3,800 client-visits, but its actual level of activity was 3,820 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for May: Data used in budgeting:  Actual results for May:  The overall revenue and spending variance (i.e., the variance for net operating income in the revenue and spending variance column on the revenue and spending variances report) for May would be closest to:
A)$284 U 
B)$670 F 
C)$670 U 
D)$284 F

Quizplus · Accepted Answer

Revenue variance = Actual revenue - Budgeted revenue
= ($809,400 - $783,200)
= $26,200 U

Spending variance = Actual expenses - Budgeted expenses
= ($522,400 - $537,200)
= $14,800 F

Net operating income variance = Revenue variance + Spending variance
= ($26,200) + ($14,800)
= $11,400 U

Therefore, the overall revenue and spending variance for May is $11,400 U, which is closest to option C ($670 U).

Lantagne Clinic Uses Client-Visits as Its Measure of Activity