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Best Health Clinic uses client-visits as its measure of activity. During January, 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 January:
Data used in budgeting:
Fixed clement per month Variable element per client-visit
Revenue - $27.30
Personnel expenses.. $23,000 $8.50
Medical supplies 500 4.30
Occupancy expenses ..... 7,400 0.80
Administrative expenses... 2,500 0.30
Total expenses.... $33,400 $13.90
Actual results for January:
Revenue.. $89,667
Personnel expenses ... $50,445
Medical supplies ....... $14,767
Occupancy expenses... $9,942
Administrative expenses ... $3,387
Required:
1. Prepare a flexible budget performance report for Best Health Clinic for the month of January.

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emaduet2012

Answer:

Answer is explained below. If you face difficulty then please see attached file.

Explanation:

Particulars Cost formula Actual Spending variance  Flexible budget Activity variance Planning budget

Patients  3290   3290   3300

Revenue 27.30q 89667 150 U 89817 273 U 90090

Expenses        

Personal expenses 23000+8.50q 50445 520 F 50965 85 F 51050

Medical supplies 500+4.30q 14767 120 U 14647 43 F 14690

Occupancy expense 7400+.80q 9942 90 F 10032 8 F 10040

Administrative expense 2500+.30q 3387 100 F 3487 3 F 3490

Total expense  78541 590 F 79131   79270

Net income  11126 440 F 10686 134 U 10820

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Answer:

Flexible Budget              cost formula   flexible budget Actual cost variance

                                                                at 3,290 visits

Revenue                             $27.30        $89,817              $89,667       $150(U)

Personnel expense           $8.50          $27,965             $50,445      $22,840(U)

Medical supplies               $4.30          $14,147                $14,767        $620(U

Occupancy expenses      $0.80          $2,632                $9,942        $7,310 (U)

Admin expenses              $0.30          $987                    $3,387       $2,400(U)

Profit                                 $13.40         $44,086              $11,126      $32,960(U)

Explanation:

U means Unfavorable Variance

Getting less revenue than planned is an Unfavorable variance

Spending more cost than planned is an Unfavorable variance

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