Cayouette Clinic Uses Patient-Visits as Its Measure of Activity

question 237

Essay

Cayouette Clinic uses patient-visits as its measure of activity. During February, the clinic budgeted for 2,400 patient-visits, but its actual level of activity was 2,700 patient-visits. The clinic uses the following revenue and cost formulas in its budgeting, where q is the number of patient-visits:
Revenue: $53.80q
Personnel expenses: $32,000 + $16.60q
Medical supplies: $700 + $8.80q
Occupancy expenses: $10,400 + $1.90q
Administrative expenses: $5,500 + $0.20q
The clinic reported the following actual results for February: Required:
Prepare the clinic's flexible budget performance report for February. Label each variance as favorable (F) or unfavorable (U).

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Definitions:

Raw Materials

Basic substances or components that are processed or transformed into a finished product.

Credit Sales

Sales made by a business where the payment is deferred to a later date, typically involving issuing an invoice to the customer.

Finished Goods Inventory

The completed products that are ready to be sold but have not yet been sold to customers.

Raw Materials Purchases

The acquisition of the basic materials and components needed for the production of goods.