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 net operating income in January would be closest to:
A)$143 U
B)$5,957 F
C)$143 F
D)$5,957 U

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 net operating income in January would be closest to:

Data used in budgeting:

Actual results for January:

-The activity variance for net operating income in January would be closest to:
A)$143 U 
B)$5,957 F 
C)$143 F 
D)$5,957 U

Quizplus · Accepted Answer

To calculate the activity variance, we need to compare the budgeted net operating income with the actual net operating income based on the level of activity achieved. Since the question does not provide any additional information about the level of activity, we can assume that it was the same as the budgeted level. Therefore, the actual net operating income of $56,143 can be compared to the budgeted net operating income of $56,000, resulting in a favorable variance of $143 (actual > budget). Since the variance is favorable, the answer is C, $143 F (F stands for favorable).

Monard Clinic Uses Client-Visits as Its Measure of Activity