Kaina Clinic uses client-visits as its measure of activity. During May, the clinic budgeted for 3,000 client-visits, but its actual level of activity was 2,970 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for May:
Data used in budgeting:
Actual results for May:

-The activity variance for net operating income in May would be closest to:
A) $396 F
B) $396 U
C) $486 F
D) $486 U

Question

Kaina Clinic uses client-visits as its measure of activity. During May, the clinic budgeted for 3,000 client-visits, but its actual level of activity was 2,970 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for May:
Data used in budgeting:
  Actual results for May:
 
-The activity variance for net operating income in May would be closest to:
A) $396 F 
B) $396 U 
C) $486 F 
D) $486 U

Quizplus · Accepted Answer

11ea7761_177b_7011_81a5_715189487224_TB2580_00 Because the flexible budget net operating income is less than the planning budget, the variance is unfavorable (U).

Kaina Clinic Uses Client-Visits as Its Measure of Activity