Question

Zelenka Clinic uses client-visits as its measure of activity. During June, the clinic budgeted for 2,700 client-visits, but its actual level of activity was 2,710 client-visits. The clinic has provided the following data concerning the formulas to be used in its budgeting for June:
Fixed element per month Variable element per tenant-day
Revenue $47.80
Personnel expenses $32,300 $15.50
Medical supplies $1,700 6.20
Occupancy expenses $10,800 1.40
Administrative expenses $5,400 0.10
Total Expenses $50,200.00
$23.20
The administrative expenses in the planning budget for June would be closest to:
a. $5,671
b. $5,511
c. $5,531
d. $5,670
The net operating income in the planning budget for June would be closest to:
a. $18,384
b. $16,466
c. $16,220
d. $18,248
The medical supplies in the flexible budget for June would be closest to:
a. $17,717
b. $17,587
c. $18,502
d. $18,440

Answer 1

Answer:

The administrative expenses in the planning budget for June would be closest to:

• d. $5,670  ⇒ $5,400 + (2,700 x $0.10) = $5,400 + $270 = $5,670

The net operating income in the planning budget for June would be closest to:

• c. $16,220  ⇒ ($47.80 x 2,700) - [$50,200 + (2,700 x $23.20)] = $129,060 - ($50,200 + $62,640) = $129,060 - $112,840 = $16,220

The medical supplies in the flexible budget for June would be closest to:

• d. $18,440 ⇒ $1,700 x (2,700 x $6.20) = $1,700 + $16,740 = $18,440