Ruiz Clinic Bases Its Budgets on the Activity Measure Patient-Visits

question 12

Essay

Ruiz Clinic bases its budgets on the activity measure patient-visits. During July, the clinic planned for an activity level of 3,700 patient-visits, but the activity level was actually 3,600 patient-visits. The clinic has provided the following data concerning the formulas it uses in its budgeting:
Required:
Prepare the clinic's flexible budget for July based on the actual level of activity for the month.

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Definitions:

Extraordinary Loss

Unusual and infrequent losses that are not part of the ordinary activities of a business, such as losses from natural disasters.

Goodwill Impairment

A charge that occurs when the fair value of goodwill falls below its carrying value on the balance sheet, indicating that the asset is not generating the expected profits.

Condensed Income Statement

A simplified financial statement showing the gross revenue, expenses, and net income of a company, omitting detailed accounts.

Adjusting Entries

Journal entries made at the end of an accounting period to allocate revenue and expenses to the period in which they actually occurred.