4 **Skagit Clinic Patient-Visit Activity and Administrative Expense Analysis**Skagit Clinic measures its activity in patient-visits. - **December Budget and Actual Activity:** - **Budgeted Activity:** 1,640 patient-visits. - **Actual Activity:** 1,775 patient-visits.- **Cost Formula for Administrative Expenses:** - **Variable Cost:** $2.80 per patient-visit. - **Fixed Cost:** $18,700 per month.- **December Actual Administrative Expense:** - Total Expense: $25,225.**Question:** What was the spending variance for administrative expenses for December?**Explanation:**- To calculate the spending variance, you need to know the expected (budgeted) expense and compare it with the actual expense.- **Budgeted Expense Calculation:** \[ \text{Budgeted Expense} = (\text{Variable Cost per Patient-Visit} \times \text{Actual Patient-Visits}) + \text{Fixed Cost} \] \[ \text{Budgeted Expense} = ($2.80 \times 1,775) + $18,700 = $4,970 + $18,700 = $23,670 \]- **Spending Variance Calculation:** \[ \text{Spending Variance} = \text{Actual Expense} - \text{Budgeted Expense} \] \[ \text{Spending Variance} = $25,225 - $23,670 = $1,555 \]The spending variance for administrative expenses for December was **$1,555**.

Spending variance for administrative expenses = Actual administrative expenses - Budgeted…

Skagit Clinic measures its activity in patient-visits. In December, the budgeted level of activity was 1,640 patient-visits and the actual level of activity was 1,775 patient-visits. The cost formula for administrative expenses is $2.80 per patient-visit plus $18,700 fixed cost per month. The actual administrative expense for December was $25,225. What was the spending variance for administrative expenses for December?

Skagit Clinic measures its activity in patient-visits. In December, the budgeted level of activity was 1,640 patient-visits and the actual level of activity was 1,775 patient-visits. The cost formula for administrative expenses is $2.80 per patient-visit plus $18,700 fixed cost per month. The actual administrative expense for December was $25,225. What was the spending variance for administrative expenses for December?

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter9: Profit Planning And Flexible Budgets

Section: Chapter Questions

Problem 48BEB: Performance Report Based on Budgeted and Actual Levels of Production Balboa Company budgeted...

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