The county hospital is the only medical facility serving an area with a populati

Question

The county hospital is the only medical facility serving an area with a population of 8400. In 20x1 the radiology department purchased a used CAT scaner from a large hospital for $50,000. The purchase has not been anticipated when the department's 20x1 budget was drawn up, and the repair costs for the machine was $7,300 more than expected $40,300. There were 680 scans performed rather than the 600 budgeted, and revenue was $300 less per scan than the $2,600 expected. During that period, additional temporary staf had been used, which increased the variable costs per scan from $275 budgeted to an unexpected $475 per scan. Non-variable scpenses were budgeted at $40,300, and the repairs were the only variance.

Questions:

a. Is the non-variable espense variance favorable or unfavorable? what is the amount?

b. What is the unexplained cost-related variance?

c. Create a flexile budget for revenue

d. what is the revenue rate variance? Is it favorable or unfavorable? what is the volume variance? is it favorable or unfavorable?

e. Create a flexible budget for the variable cost

f. what is the cost variance? is it favorable or unfavorable? what is teh volume variance due to cost? is it favorable or unfavorable?

Explanation / Answer

Non Variable Expense budgeted                  40,300 Non Budgeted Expense Actual                  47,600 a Non variable Expense Variance =                    7,300 unfavorable c Flexible Budget For 680 Scans Details Amt $ Revenue @ 2600 per scan            1,768,000 e Variable costs@275 per scan                187,000 Non Variable cost                  40,300 Total Cost                227,300 Revenue over Cost            1,540,700 Revenue Rate Variance =( Actual Rate -Std Rate)*Actual Units sold =680*(2300-2600)=                204,000 unfavorable Revenue volume variance= Std Price /unit*(Actual vol-budgeted Unit) =2600*(680-600)=                  208,000 Favorable Actual Cost for 680 Units Variable costs @475                323,000 Non Variable cost                  47,600 Total Cost                  370,600 f Cost Variance=370600-227300=                143,300 unfvorable Planning Budget   For 600 scans Variable cost @275                165,000 Non Variable cost                  40,300 Total Cost                  205,300 Volume variance =227300-205300=                  22,000 unfavorable

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