Paradiso Medical Clinic measures its activity in terms of patient-visits. Last month, the budgeted level of activity was 1,060 patient-visits and the actual level of activity was 1,050 patient-visits. The cost formula for administrative expenses is $3.00 per patient-visit plus $17,000 per month. The actual administrative expense was $19,300. In the clinic's flexible budget performance report for last month, the spending variance for administrative expenses was:

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The spending variance is calculated as the difference between the actual administrative expense and the flexible budget administrative expense. The flexible budget administrative expense is calculated as the budgeted fixed administrative expense plus the variable administrative expense per patient-visit multiplied by the actual number of patient-visits. The budgeted fixed administrative expense is $17,000 per month. The variable administrative expense per patient-visit is $3.00. The actual number of patient-visits is 1,050. Therefore, the flexible budget administrative expense is $17,000 + ($3.00 x 1,050) = $20,150. The spending variance is $19,300 - $20,150 = -$850. Therefore, the spending variance for administrative expenses is $850 F.

Paradiso Medical Clinic Measures Its Activity in Terms of Patient-Visits