Asked by James O'Connor on Jul 09, 2024
Verified
Fager Clinic uses client-visits as its measure of activity. During February, the clinic budgeted for 2,200 client-visits, but its actual level of activity was 2,250 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for February:Data used in budgeting: Actual results for February:
The activity variance for personnel expenses in February would be closest to:
A) $845 U
B) $1,075 F
C) $1,075 U
D) $845 F
Activity Variance
A measure of the difference between planned or budgeted activity levels and actual activity levels.
Personnel Expenses
Costs related to the compensation and benefits of a company's employees.
Budgeting
A process of creating a plan to spend your money, allowing you to determine in advance whether you will have enough money to do the things you need or want to do.
- Acquire knowledge on how to evaluate and understand activity variances in various expense types.
- Grasp the significance of activity differences on the paychecks of staff members.
Verified Answer
Budgeted personnel expenses = $12 x 2,200 = $26,400
Actual personnel expenses = $27,375
Activity variance = Actual results - Budgeted results
Activity variance = $27,375 - $26,400
Activity variance = $975 U (unfavorable)
Therefore, the activity variance for personnel expenses in February would be closest to $1,075 U.
Learning Objectives
- Acquire knowledge on how to evaluate and understand activity variances in various expense types.
- Grasp the significance of activity differences on the paychecks of staff members.
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