Ruetz Clinic Uses Client-Visits as Its Measure of Activity

question 315

Multiple Choice

Ruetz Clinic uses client-visits as its measure of activity. During November, the clinic budgeted for 2,500 client-visits, but its actual level of activity was 2,520 client-visits. The clinic has provided the following data concerning the formulas to be used in its budgeting: The net operating income in the flexible budget for November would be closest to:

• A)$9,461
• B)$12,950
• C)$9,312
• D)$13,376

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Definitions:

Adverse Selection

Form of market failure resulting when products of different qualities are sold at a single price because of asymmetric information, so that too much of the low-quality product and too little of the high-quality product are sold.

High Blood Sugar

A condition characterized by an excessively high level of glucose in the blood, commonly associated with diabetes.

Excess Drinking

The consumption of alcohol beyond what is considered moderate or socially acceptable, often leading to adverse health and social effects.

Asymmetric Information

Situation in which a buyer and a seller possess different information about a transaction.