Miao Clinic uses client-visits as its measure of activity.During July, the clinic budgeted for 3, 000 client-visits, but its actual level of activity was 2, 980 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 medical supplies in July would be closest to:
A)$936 F
B)$936 U
C)$1, 100 U
D)$1, 100 F

Question

Miao Clinic uses client-visits as its measure of activity.During July, the clinic budgeted for 3, 000 client-visits, but its actual level of activity was 2, 980 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 medical supplies in July would be closest to:
A)$936 F 
B)$936 U 
C)$1, 100 U 
D)$1, 100 F

Quizplus · Accepted Answer

The spending variance for medical supplies can be calculated as follows:

Budgeted amount for medical supplies - Actual amount spent on medical supplies

The budgeted amount for medical supplies can be calculated using the following formula:

Budgeted medical supplies = Budgeted variable cost per client-visit x Actual client-visits

Budgeted variable cost per client-visit = $90 (given)

Budgeted medical supplies = $90 x 3,000 = $270,000

The actual amount spent on medical supplies is given as $268,900.

Spending variance = $270,000 - $268,900 = $1,100 U

Therefore, the best choice is C, $1,100 U.

Miao Clinic Uses Client-Visits as Its Measure of Activity