Fager Clinic Uses Client-Visits as Its Measure of Activity

question 309

Multiple Choice

Fager Clinic uses client-visits as its measure of activity. During February, the clinic budgeted for 2,390 client-visits, but its actual level of activity was 2,440 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 revenue variance for February would be closest to:

• A) $4,166 U
• B) $4,166 F
• C) $7,671 U
• D) $7,671 F

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Definitions:

LIFO Inventory

LIFO inventory is a method of inventory valuation where the most recently produced or purchased items are recorded as sold first, potentially reducing taxes in periods of inflation.

Sales Exceed Production

A situation where the demand for a company's products surpasses its current production capacity or available inventory.

Variable Costing

An accounting method that only includes variable costs—costs that vary with production levels—when calculating the cost of producing a good or service.

Net Operating Income

The profit generated from a company’s everyday business operations, calculated by subtracting operating expenses from revenue.