Parisi Clinic Uses Client-Visits as Its Measure of Activity

question 87

Multiple Choice

Parisi Clinic uses client-visits as its measure of activity. During March, the clinic budgeted for 2,300 client-visits, but its actual level of activity was 2,350 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 March would be closest to:

• A)$11,100
• B)$9,905
• C)$10,340
• D)$12,500

---

Definitions:

Fixed Overhead

Regular, fixed expenses associated with the operations of a business that do not vary with production volume.

Raw Material

Basic materials used in the production process of goods, often processed in intermediate steps before fabrication of the final product.

Fixed Overhead

Charges that keep the same level despite the degree of manufacturing or sales activities, including space rental, worker wages, and protection plans.

Predetermined Overhead Rate

An estimated overhead cost rate used in cost accounting to allocate overhead expenses to products or job orders.