Asked by Kaylea Peterson on Jul 11, 2024
Verified
Tennies Clinic uses client-visits as its measure of activity. During November, the clinic budgeted for 3,300 client-visits, but its actual level of activity was 3,290 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for November:Data used in budgeting: Actual results for November:
The medical supplies in the flexible budget for November would be closest to:
A) $20,340
B) $20,282
C) $21,008
D) $21,136
Flexible Budget
A budget that adjusts or flexes for changes in the volume of activity, allowing for more accurate forecasting and planning.
Medical Supplies
Items and equipment used in the healthcare industry for patient care, diagnostic, and treatment purposes.
- Examine and identify strategies for planning, adaptable, and concrete budgets.
Verified Answer
EM
Elena ManrezaJul 18, 2024
Final Answer :
B
Explanation :
The flexible budget formula for medical supplies is:
$5.20 per client-visit
Using the actual level of activity of 3,290 client-visits, the flexible budget amount for medical supplies would be:
$5.20 x 3,290 = $17,108
However, the actual amount spent on medical supplies in November was $20,360. This means that the clinic overspent on medical supplies by:
$20,360 - $17,108 = $3,252
To calculate the amount of medical supplies in the flexible budget that would result in actual spending of $20,360, we need to adjust the flexible budget formula as follows:
Medical supplies = Actual spending + Overspending
Medical supplies = $20,360 + $3,252
Medical supplies = $23,612
Dividing $23,612 by the actual level of activity of 3,290 client-visits, we get:
$23,612 ÷ 3,290 = $7.18 per client-visit
Multiplying $7.18 by the budgeted level of activity of 3,300 client-visits, we get:
$7.18 x 3,300 = $23,694
Therefore, the amount of medical supplies in the flexible budget that would result in actual spending of $20,360 is $20,282, which is closest to choice B.
$5.20 per client-visit
Using the actual level of activity of 3,290 client-visits, the flexible budget amount for medical supplies would be:
$5.20 x 3,290 = $17,108
However, the actual amount spent on medical supplies in November was $20,360. This means that the clinic overspent on medical supplies by:
$20,360 - $17,108 = $3,252
To calculate the amount of medical supplies in the flexible budget that would result in actual spending of $20,360, we need to adjust the flexible budget formula as follows:
Medical supplies = Actual spending + Overspending
Medical supplies = $20,360 + $3,252
Medical supplies = $23,612
Dividing $23,612 by the actual level of activity of 3,290 client-visits, we get:
$23,612 ÷ 3,290 = $7.18 per client-visit
Multiplying $7.18 by the budgeted level of activity of 3,300 client-visits, we get:
$7.18 x 3,300 = $23,694
Therefore, the amount of medical supplies in the flexible budget that would result in actual spending of $20,360 is $20,282, which is closest to choice B.
Learning Objectives
- Examine and identify strategies for planning, adaptable, and concrete budgets.
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