Please provide explanations also Here are the budgets of Brandon Surgery Center

Question

Please provide explanations also

Here are the budgets of Brandon Surgery Center for the most recent historical quarter, in thousands of dollars: Simple Flexible Actual Number of surgeries 1,200 1,300 1,300 Patient revenue $2,400 $2,600 $2,535 Salary expense $1,200 $1,300 $1,365 Non-salary expense $6oo $650 $8 Profit $600 $650 $585 The center assumes that all revenues and costs are variable and hence tied directly to patient volume. a. Explain how each amount in the flexible budget was calculated. (Hint: Examine the simple budget to determine the relationship of each budget line to volume.) b. Determine the variances for each line of the P&L; statement, both n dollar terms and in percentage terms. c. What do the results in Part b tell Brandon?s managers about the center?s operations for the quarter?

Explanation / Answer

a. Each amount in the flexible budget has been obtained by increasing each amount of the simple budget by 8.33%.

b.

c. The Patients revenue is quite a cause of concern as it is not huge enough to cover the salary expense which is almost half of revenue and along with it, there is non salary expense too. Hence, revenue needs to be increased with a view to keeping the centre’s operations viable.

Actual Vs Simple Details Simple Actual In Dollar Terms In % Number of Surgeries 1200 1300 100 8.33 Patient Revenue 2400 2535 135 5.63 Salary Expense 1200 1365 165 13.75 Non-Salary Expense 600 585 (15) -2.50 Profit 600 585 (15) -2.50

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