Hagel Clinic uses client-visits as its measure of activity. During July, the clinic budgeted for 2,300 client-visits, but its actual level of activity was 2,320 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for July: Data used in budgeting: Actual results for July: The spending variance for occupancy expenses in July would be closest to:
A)$150 F
B)$190 F
C)$150 U
D)$190 U

Question

Hagel Clinic uses client-visits as its measure of activity. During July, the clinic budgeted for 2,300 client-visits, but its actual level of activity was 2,320 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for July: Data used in budgeting:  Actual results for July:  The spending variance for occupancy expenses in July would be closest to:
A)$150 F 
B)$190 F 
C)$150 U 
D)$190 U

Quizplus · Accepted Answer

The formula used in budgeting for occupancy expenses was: 
$14,500 + $4.30 per client-visit
Budgeted occupancy expenses for July = $14,500 + ($4.30 x 2,300) = $24,690

Actual occupancy expenses for July = $25,770
Variance = Actual - Budgeted = $25,770 - $24,690 = $1,080 U

Therefore, the spending variance for occupancy expenses in July would be $1,080 U. The answer is C, $150 U is not a possible option based on the calculations.

Hagel Clinic Uses Client-Visits as Its Measure of Activity