Burget Clinic uses client-visits as its measure of activity. During July, the clinic budgeted for 2,100 client-visits, but its actual level of activity was 2,110 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for July:
-The spending variance for occupancy expenses in July would be closest to:
A) $265 F
B) $280 U
C) $280 F
D) $265 U

Question

Burget Clinic uses client-visits as its measure of activity. During July, the clinic budgeted for 2,100 client-visits, but its actual level of activity was 2,110 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for July: 
-The spending variance for occupancy expenses in July would be closest to:
A) $265 F 
B) $280 U 
C) $280 F 
D) $265 U

Quizplus · Accepted Answer

The spending variance for occupancy expenses can be calculated using the formula:
(Spending Variance) = (Actual Activity * Budgeted Rate) - Actual Cost

From the given data:
Actual Activity = 2,110 client-visits
Budgeted Rate = $12 per client-visit
Actual Cost = $25,420

Using the formula:
(Spending Variance) = (2,110 * $12) - $25,420
Spending Variance = $25,320 - $25,420
Spending Variance = $280 F

Therefore, the best choice is C) $280 F.

Burget Clinic Uses Client-Visits as Its Measure of Activity