Springmeyer Clinic Uses Client-Visits as Its Measure of Activity

question 86

Multiple Choice

Springmeyer Clinic uses client-visits as its measure of activity. During August, the clinic budgeted for 2,900 client-visits, but its actual level of activity was 2,940 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for August:
-The personnel expenses in the planning budget for August would be closest to:

• A) $69,600
• B) $73,800
• C) $70,560
• D) $73,200

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Definitions:

Capital Asset Pricing Model (CAPM)

Equation of the Security Market Line showing the relationship between expected return and beta.

Reward To Risk Ratio

A measure that evaluates the anticipated gains from an investment against the level of risk assumed to achieve these gains.

Security Market Line

A graphical representation of the expected return of all risky marketable securities as a function of their beta, or systemic risk, according to the capital asset pricing model.

Diversifiable Risk

Relates to the risk that can be reduced or eliminated from a portfolio by holding a variety of investments.