Askland Clinic uses client-visits as its measure of activity. During October, the clinic budgeted for 3,100 client-visits, but its actual level of activity was 3,250 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for October:

Data used in budgeting:

Fixed Component Variable Component

Personnel Expenses $22,100 $8.60 per client visit

Actual Personnel Expense for October: $49,600

You are in charge of personnel and related expenses for the clinic. The director of the clinic asked you (not so nicely) why your personnel costs were $840 over budget in October. She further said the clinic cannot afford to be over budget even a little and everyone must work hard to control their costs. Using variance analysis, explain to the director why she should be thanking you for controlling costs rather than saying you are over budget. To get credit you must support your answer with calculations.