Guareno Clinic uses client-visits as its measure of activity. During December, the clinic budgeted for 2,500 client-visits, but its actual level of activity was 2,450 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) $13,720
B) $14,410
C) $14,500
D) $14,286

Question

Guareno Clinic uses client-visits as its measure of activity. During December, the clinic budgeted for 2,500 client-visits, but its actual level of activity was 2,450 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) $13,720 
B) $14,410 
C) $14,500 
D) $14,286

Quizplus · Accepted Answer

Cost = Fixed cost + (Variable cost per unit × q)
= $10,000 + ($1.80 × 2,450) = $14,410

Guareno Clinic Uses Client-Visits as Its Measure of Activity