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 3,900 patients but actually treated 4,000 patients. The following additional information for October is available: Nurse-hours Nursing cost Supplies & other variable costs Fixed costs Budget 1,560 $37,440 $39,000 $106,500 Actual 1,680 $31,300 $29,100 $105,700 Variance 120 $6,140 $9,900 $800 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

Explanation / Answer

Flexible budget variance = actual result - flexible budget nursing cost (flexible budget ) = 37440/1560*1680 40320 supplies & other variable costs 39000/3900*4000 40000 flexible Actual Variance budget budget Nursing cost 40,320 31,300 9,020 F supplies & other variable costs 40,000 29,100 10,900 F fixed costs 106,500 105,700 800 F total expense 186,820 166,100 20,720 F

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