Ruetz Clinic uses client-visits as its measure of activity. During November, the clinic budgeted for 2,500 client-visits, but its actual level of activity was 2,520 client-visits. The clinic has provided the following data concerning the formulas to be used in its budgeting:

-The net operating income in the flexible budget for November would be closest to:
A)$9,461
B)$12,950
C)$9,312
D)$13,376

Question

Ruetz Clinic uses client-visits as its measure of activity. During November, the clinic budgeted for 2,500 client-visits, but its actual level of activity was 2,520 client-visits. The clinic has provided the following data concerning the formulas to be used in its budgeting:

-The net operating income in the flexible budget for November would be closest to:

-The net operating income in the flexible budget for November would be closest to:
A)$9,461 
B)$12,950 
C)$9,312 
D)$13,376

Quizplus · Accepted Answer

To calculate the net operating income for November, we need to subtract the total actual expenses from the total budgeted revenue in the flexible budget.

Total budgeted revenue = 70,000 + (1,200 x 6) + (3,400 x 2) = $85,200

Total actual expenses = 42,000 + 4,500 + 13,200 + 5,125 = $64,825

Net operating income = $85,200 - $64,825 = $20,375

Therefore, the closest net operating income in the flexible budget for November is $13,376 (option D).

Ruetz Clinic Uses Client-Visits as Its Measure of Activity