Buonocore Clinic Uses Client-Visits as Its Measure of Activity

question 185

Multiple Choice

Buonocore Clinic uses client-visits as its measure of activity.During August, the clinic budgeted for 2, 800 client-visits, but its actual level of activity was 2, 770 client-visits.The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for August: Data used in budgeting: Actual results for August: The medical supplies in the flexible budget for August would be closest to:

• A)$18, 697
• B)$18, 880
• C)$18, 899
• D)$18, 497

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Definitions:

Net Operating Income

The total profit of a company after operating expenses are subtracted from gross income.

Residual Income

The income that remains after subtracting all required costs of capital from operating income.

Average Operating Assets

The average value of the assets used in the normal operation of a business to generate revenue, calculated typically over a fiscal year.

Net Operating Income

A measure of a company's profitability by subtracting operating expenses from its operating revenues.