Laizure Clinic Uses Patient-Visits as Its Measure of Activity

question 172

Essay

Laizure Clinic uses patient-visits as its measure of activity. The clinic bases its budgets on the following information: Revenue should be $55.90 per patient-visit. Personnel expenses should be $35,700 per month plus $15.80 per patient-visit. Medical supplies should be $2,000 per month plus $11.20 per patient-visit. Occupancy expenses should be $8,400 per month plus $2.00 per patient-visit. Administrative expenses should be $3,900 per month plus $0.10 per patient-visit.The clinic reported the following actual results for November:
Required:Prepare a report showing the clinic's revenue and spending variances for November. Label each variance as favorable (F) or unfavorable (U).

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Definitions:

Present Value

The current worth of a future sum of money or stream of cash flows, given a specified rate of return. Present value accounts for the time value of money.

Interest Rate

The financial obligation a borrower incurs to a lender, calculated as a percentage of the principal, for the right to use certain assets.

Deposits Increase

A rise in the amount of money held in bank accounts, often indicative of an economy's health or individual savings growth.

Compounded Annually

The process of calculating interest on both the initial principal and the accumulated interest from previous periods on a yearly basis.