Monard Clinic uses client-visits as its measure of activity. During January, the clinic budgeted for 3,700 client-visits, but its actual level of activity was 3,710 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for January:

Data used in budgeting:

Actual results for January:

-The activity variance for administrative expenses in January would be closest to:
A)$4 F
B)$206 U
C)$4 U
D)$206 F

Question

Monard Clinic uses client-visits as its measure of activity. During January, the clinic budgeted for 3,700 client-visits, but its actual level of activity was 3,710 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for January:

Data used in budgeting:

Actual results for January:

-The activity variance for administrative expenses in January would be closest to:

Data used in budgeting:

Actual results for January:

-The activity variance for administrative expenses in January would be closest to:
A)$4 F 
B)$206 U 
C)$4 U 
D)$206 F

Quizplus · Accepted Answer

The activity variance is calculated as the difference between the actual cost and the flexible budget cost. Since the answer choices only provide information about the direction of the variance (i.e. favorable or unfavorable) and not the actual amounts, we have to determine the direction of the variance based on the given information.

If the actual administrative expenses are $4,000 and the flexible budget amount is $4,004, then the activity variance would be $4 unfavorable (4,000 - 4,004 = -4). Therefore, the best choice is C, which indicates a $4 unfavorable variance.

Monard Clinic Uses Client-Visits as Its Measure of Activity