Lauser Clinic Uses Client-Visits as Its Measure of Activity

question 105

Multiple Choice

Lauser Clinic uses client-visits as its measure of activity. During July, the clinic budgeted for 3,700 client-visits, but its actual level of activity was 3,690 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for July:
-The personnel expenses in the planning budget for July would be closest to:

• A) $54,730
• B) $54,641
• C) $52,341
• D) $52,483

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Definitions:

Cost of Debt

The interest rate a company pays on its borrowings, often expressed as a percentage.

Cost of Equity

The return a firm theoretically pays to its equity investors, i.e., shareholders, to compensate for the risk they undertake by investing their capital.

Separate Entities

A principle in accounting where a business is considered a separate entity from its owners or shareholders, ensuring that business transactions are kept distinct from the personal transactions of owners.

Preferred Stock

A security that is similar to bonds in some respects and to common stock in others. Preferred dividends are similar to interest payments on bonds in that they are fixed in amount and generally must be paid before common stock dividends can be paid. If the preferred dividend is not earned, the directors can omit it without throwing the company into bankruptcy.