The controller for Rainbow Children’s Hospital, located in Munich, Germany, esti

Question

The controller for Rainbow Children’s Hospital, located in Munich, Germany, estimates that the hospital uses 36 kilowatt-hours of electricity per patient-day, and that the electric rate will be 0.24 euro per kilowatt-hour. The hospital also pays a fixed monthly charge of 3,100 euros to the electric utility to rent emergency backup electric generators.

Required:

Construct a flexible budget for the hospital’s electricity costs using each of the following techniques.

Formula flexible budget.

Columnar flexible budget for 41,000, 51,000 and 61,000 patient-days of activity.

Total budgeted monthly overhead cost = Budgeted variable overhead cost per activity unit x Total activity units + Bugeted fixed overhead cost per month x patient days +

Explanation / Answer

Cost formula :

Total budgeted monthly overhead cost = Budgeted variable overhead cost per activity unit * Total activity units + Bugeted fixed overhead cost per month 0.24 * patient days + 3100

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