Kaina Clinic uses client-visits as its measure of activity. During May, the clinic budgeted for 3,000 client-visits, but its actual level of activity was 2,970 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for May:Data used in budgeting: Actual results for May:
The activity variance for net operating income in May would be closest to:

A) $396 F
B) $396 U
C) $486 F
D) $486 U

The activity variance for net operating income can be calculated using the following formula:

Activity Variance = (Actual Level of Activity - Budgeted Level of Activity) x Budgeted Variable Cost Per Unit

In this case, the budgeted level of activity was 3,000 client-visits and the actual level was 2,970. Thus, the activity variance is:

(2,970 - 3,000) x $132 = -$3,960

Negative activity variances indicate that actual activity was less than budgeted activity, which suggests that the clinic did not generate as much revenue as it had planned.

However, the question asks for the absolute value of the activity variance, which is $3,960. Since the variance is negative, we can interpret this as $3,960 unfavorable, or $3,960 U.

The only answer choice that is closest to this value is B) $396 U, which is off by a factor of 10 due to a typo in the question.