Fager Clinic uses client-visits as its measure of activity. During February, the clinic budgeted for 2,200 client-visits, but its actual level of activity was 2,250 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for February:Data used in budgeting: Actual results for February:
The activity variance for personnel expenses in February would be closest to:

A) $845 U
B) $1,075 F
C) $1,075 U
D) $845 F

Question

Fager Clinic uses client-visits as its measure of activity. During February, the clinic budgeted for 2,200 client-visits, but its actual level of activity was 2,250 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for February:Data used in budgeting:

Actual results for February:

The activity variance for personnel expenses in February would be closest to:

A) $845 U
B) $1,075 F
C) $1,075 U
D) $845 F

Khadijah Jones · Accepted Answer

Final Answer : C, Explanation :  Personnel expenses are budgeted at $12 per client-visit, and actual personnel expenses for February are $27,375.Budgeted personnel expenses = $12 x 2,200 = $26,400Actual personnel expenses = $27,375Activity variance = Actual results - Budgeted resultsActivity variance = $27,375 - $26,400Activity variance = $975 U (unfavorable)Therefore, the activity variance for personnel expenses in February would be closest to $1,075 U.

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