Askland Clinic Uses Client-Visits as Its Measure of Activity

question 140

Multiple Choice

Askland Clinic uses client-visits as its measure of activity. During October, the clinic budgeted for 3,100 client-visits, but its actual level of activity was 3,130 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for October:

Data used in budgeting:
Actual results for October:
-The revenue variance for October would be closest to:

• A)$2,826 F
• B)$3,690 F
• C)$2,826 U
• D)$3,690 U

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Definitions:

Fixed Costs

Costs that do not vary with the level of production or sales within the short term, such as rent, salaries, and insurance premiums.

Break-Even Analysis

A financial calculation to determine the point at which revenue equals costs, indicating no profit or loss.

Variable Costs

Costs that vary in direct proportion to changes in the level of production or sales volume, such as materials and labor.

Break-Even Analysis

A calculation to determine the point at which revenue received equals the costs associated with receiving the revenue, helping businesses to identify profitability thresholds.