Everyone Deserves to Smile mobile dentist office budgeted for
4,335 patient visits a year. Everyone Deserves to Smile actually
saw 4,435 patients during the year and they have provided the
following data:
| Fixed Portion for Budget | Variable | Portion per patient visit for Budget | | Actual Results | |
| Revenue | $71 | $416,700 | |
| Personnel Expenses | $90,000 | $87,000 | |
| Medical Supplies | $11 | $38,900 | |
| Occupancy Expenses | $,000 | $1.50 | $20,000 |
| Admin Expenses | $19,000 | $0.50 | $19,550 |
Based on the given information, what is the flexible budget
variance for admin expenses?
A- 1,667.5 unfavorable
B- 1,617.5 unfavorable
C- 1,617.5 favorable
D- 1,667.5 favorable
Answer
General guidance
Variance analysis: Variance analysis is the process of analyzing the difference or variance between the standard and the actual processes. It is the quantitative investigation used to control the activities performed.
Budget variance: Budget variance is known as the difference between the expected amount and the actual amount. Here, when the actual amount of income is higher than the expected, it is favorable. In case of expense, it is unfavorable.
Favorable and unfavorable variances: When the actual price is lesser than that of budgeted price, the variance is favorable. If the standard price is lesser than actual price, the variance is unfavorable.
Step-by-step
Step 1 of 2
Calculate the flexible budget expenditure:
Therefore, the flexible budget expenditure is $21,217.50.
It is mentioned to calculate the flexible budget variance. Thus, it is calculated by deducting the actual expenditure from the budgeted expenditure. The flexible budget expenditure is calculated by multiplying the variable portion of administration expenses with the number of patients and added with the fixed portion of administration expenses. Therefore, the flexible budget expenditure is $21,217.50.
Step 2 of 2
Calculate the flexible budget variance:
Therefore, the flexible budget variance is $1,667.5 favorable.
The flexible budget variance is $1,667.5 favorable.
It is mentioned to calculate the flexible budget variance. Thus, it is calculated by deducting the actual expenditure from the budgeted expenditure. Therefore, the flexible budget variance is $1,667.5 favorable. If the budgeted is higher than the actual expenses then it is favorable variance.
Answer
The flexible budget variance is $1,667.5 favorable.
Answer only
The flexible budget variance is $1,667.5 favorable.
