Asked by Ahmed Aldughaither on Jul 09, 2024
Verified
Leist Clinic uses client-visits as its measure of activity. During September, the clinic budgeted for 2,200 client-visits, but its actual level of activity was 2,170 client-visits. The clinic has provided the following data concerning the formulas to be used in its budgeting: The medical supplies in the flexible budget for September would be closest to:
A) $22,080
B) $21,798
C) $21,907
D) $21,313
Flexible Budget
A budget that adjusts or flexes with changes in the volume or activity levels of a company, allowing for more accurate comparisons to actual performance.
Medical Supplies
Items used in healthcare settings for the treatment, diagnosis, or prevention of illness and disease, ranging from disposable gloves to complex medical devices.
Client-Visits
The number of visits or meetings held with clients, often used as a measure in service or consulting industries.
- Appreciate the nuances of a flexible budget and the adjustments it entails.
Verified Answer
Flexible budget for variable costs = Actual level of activity x Variable cost per unit
From the data given in the question:
- Actual level of activity = 2,170 client-visits
- Variable cost per unit of medical supplies = $10.05
Plugging these values into the formula above:
Flexible budget for variable costs = 2,170 x $10.05 = $21,798
Therefore, the closest option is B) $21,798.
Learning Objectives
- Appreciate the nuances of a flexible budget and the adjustments it entails.
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