Hoeper Clinic uses client-visits as its measure of activity. During January, the clinic budgeted for 2,600 client-visits, but its actual level of activity was 2,570 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for January:
-The administrative expenses in the planning budget for January would be closest to:
A) $5,047
B) $4,960
C) $5,106
D) $4,957

Question

Hoeper Clinic uses client-visits as its measure of activity. During January, the clinic budgeted for 2,600 client-visits, but its actual level of activity was 2,570 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for January: 
-The administrative expenses in the planning budget for January would be closest to:
A) $5,047 
B) $4,960 
C) $5,106 
D) $4,957

Quizplus · Accepted Answer

The formula for administrative expenses is fixed and therefore does not change with the level of activity. The fixed administrative expenses in the planning budget for January are $4,960, as given in the table. This amount remains the same regardless of the actual level of activity.

Hoeper Clinic Uses Client-Visits as Its Measure of Activity