Gourley Clinic uses client-visits as its measure of activity. During August, the clinic budgeted for 4,050 client-visits, but its actual level of activity was 3,970 client-visits. The clinic has provided the following data concerning the formulas to be used in its budgeting:

	Fixed element per month	Variable element per client-visit
Revenue	—	$40.70
Personnel expenses	$36,700	$11.90
Medical supplies	2,700	8.70
Occupancy expenses	9,700	2.70
Administrative expenses	6,700	.90
Total expenses	$55,800	$24.20

  
The activity variance for net operating income in August would be closest to:

	$570 U
→	$1,320 U
	$570 F

Revenue per client-visit	$ 40.70
Total variable expense per client-visit	24.20
Contribution margin per client-visit	$ 16.50
Total fixed expense	55,800
Planning budget ($16.50 × 4,050 − $55,800)	$ 11,025
Flexible budget ($16.50 × 3,970 − $55,800)	9,705
Activity variance	$ 1,320

Because the flexible budget net operating income is less than the planning budget, the variance is unfavorable (U)