Ibsen Clinic uses client-visits as its measure of activity. During December, the clinic budgeted for 3,300 client-visits, but its actual level of activity was 3,340 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for December: Data used in budgeting:
Actual results for December:
The occupancy expenses in the flexible budget for December would be closest to:
A) $15,565
B) $16,114
C) $15,945
D) $16,030

Question

Ibsen Clinic uses client-visits as its measure of activity. During December, the clinic budgeted for 3,300 client-visits, but its actual level of activity was 3,340 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for December: Data used in budgeting:
 Actual results for December:
 The occupancy expenses in the flexible budget for December would be closest to:
A) $15,565 
B) $16,114 
C) $15,945 
D) $16,030

Quizplus · Accepted Answer

Cost = Fixed cost + (Variable cost per unit × q)
= $9,100 + ($2.10 × 3,340) = $16,114

Ibsen Clinic Uses Client-Visits as Its Measure of Activity