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:

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 for computing spending variance is: 
Spending Variance = Actual Cost - Budgeted Cost
Plug in the given values: 
Actual Cost = $8,750 
Budgeted Cost = $9,000 
Spending Variance = $8,750 - $9,000 = -$250
Since the actual cost is less than budgeted cost, the spending variance is unfavorable or unfavorable or over budget. Therefore the answer is C, $150 U (Unfavorable)

Hagel Clinic Uses Client-Visits as Its Measure of Activity