Providence Hospital generates monthly performance reports for each of its depart

Question

Providence Hospital generates monthly performance reports for each of its departments. The hospital must maintain an adequate staff of attending and on-call physicians at all times, so physician costs are not affected by the number of patient visits. But all other costs do vary with patient activity. Nurse-hours are used as the activity measure for nurse costs, and patient visits are used as the activity measure for the cost of supplies and other variable costs.

The head physician of the hospital's emergency room, Yolanda Mortensen, is responsible for control of costs. During October, the emergency room unit expected to treat 3,700 patients but actually treated 4,000 patients. The following additional information for October is available:

Budget

Actual

Variance

1,480

1,680

-200

$37,000

$31,200

$5,800

$33,300

$27,900

$5,400

$101,400

$92,800

$8,600

Required
Compute the flexible-budget variances for each of the cost categories for October (NOTE: enter favorable variances as positive numbers and unfavorable variances as negative numbers):

  Nursing costs :

  Supplies and other variable costs :

  Fixed costs :

Budget

Actual

Variance

Nurse-hours

1,480

1,680

-200

Nursing cost

$37,000

$31,200

$5,800

Supplies & other variable costs

$33,300

$27,900

$5,400

Fixed costs

$101,400

$92,800

$8,600

Explanation / Answer

Flexible Budget Variance Flexible Budget Actual Budget Variance Patients 3700 4000 Nurse Hours 1480 1680 Nursing Cost $                     42,000.00 $                  31,200.00 $ 10,800.00 (F) Supplies & Other Variable $                     36,000.00 $                  27,900.00 $   8,100.00 (F) Fixed Cost $                  101,400.00 $                  92,800.00 $   8,600.00 (F) Working Flexible Budget Variance Flexible Budget Actual Budget Patients 3700 4000 Nurse Hours 1480 1680 Nursing Cost (37000/1480)*1680 $                  31,200.00 Supplies & Other Variable (33300/3700)*4000 $                  27,900.00 Fixed Cost $                  101,400.00 $                  92,800.00

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