The controller for Rainbow Children\'s Hospital, located in Munich, Germany, est

Question

The controller for Rainbow Children's Hospital, located in Munich, Germany, estimates that the hospital uses 43 kilowatt-hours of electricity per patient-day, and that the electric rate will be 0.31 euro per kilowatt-hour. The hospital also pays a fixed monthly charge of 3,800 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. 1. Formula flexible budget. 2. Columnar flexible budget for 48,000, 58,000 and 68,000 patient-days of activity. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Formula flexible budget. (Round per unit to 2 decimal places.) Total budgeted monthly overhead cost Budgeted variable = overhead cost per activity unit Total activity units Bugeted fixed + overhead cost i per month + x patient days Required 1 Required 2 >

Explanation / Answer

Question 1:

Total budgeted monthly overhead cost = (Budgeted variable overhead cost per activity unit x Total activity units) + Fixed overhead cost per month

Here:

1. Activity units is patient days

2. Each patient day uses 43 kwh and rate per Kwh is 0.31 euro. So the budgeted variable overhead cost per activity unit = 43 x 0.31 = 13.33 euro

3. Fixed overhead cost per month = 3800 euro

So the formula is as follows:

Total budgeted monthly overhead cost = (13.33 x Patient days) + 3800

Question 2:

Particulars 48000 58000 68000 Variable electricity cost 48000 x 13.33 = 639840 58000 x 13.33 = 773140 68000 x 13.33 = 906400 Fixed electricity cost 3800 3800 3800 Total electricity cost 643,640 euros 776,940 euros 910,240 euros

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