Here are the budgets of Brandon Surgery Center for the most recent historical quarter (in thousands of dollars): Static Flexible Actual Number of Surgeries 1,200 1,300 1,300 $2,400 $2,600 $2,535 Patient Revenue Salary Expense Nonsalary Expense Profit 1,200 1,300 1,365 600 650 585 $ 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 static budget to determine the relationship of each budget line to volume.) b. Determine the variances for each line of the profit and loss statement, both in dollar terms and in percentage terms. (Hint: Each line has a total variance, a volume variance, and a price variance [for revenues] and management variance [for expenses].) c. What do the Part b results tell Brandon's managers about the surgery center's operations for the quarter?

Here are the budgets of Brandon Surgery Center for the most recent historical quarter (in thousands of dollars): Static Flexible Actual Number of Surgeries 1,200 1,300 1,300 $2,400 $2,600 $2,535 Patient Revenue Salary Expense Nonsalary Expense Profit 1,200 1,300 1,365 600 650 585 $ 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 static budget to determine the relationship of each budget line to volume.) b. Determine the variances for each line of the profit and loss statement, both in dollar terms and in percentage terms. (Hint: Each line has a total variance, a volume variance, and a price variance [for revenues] and management variance [for expenses].) c. What do the Part b results tell Brandon's managers about the surgery center's operations for the quarter?

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter8: Budgeting

Section: Chapter Questions

Problem 2MAD

See similar textbooks

Similar questions

2 Fallowing are the budgets of The Bronx Surgery Center for the most recent historical quarter (in thousands of dollars): Simple Flexible Actual Number of Surgery 1,800 1,300 1,300 Patient Revenue $3,400 $2,200 $3,535 Salary Expense $1,900 $1,100 $1,165 Nonsalary Expense $800 $650 $585 Profit $800 $650 $585 The center assumes that all revenues and cost are variable and hence tied directly to patient volume. Explain how each amount in the flexible budget was…
The following are planned and actual revenues for Cutting Edge Surgery Center. Because they are one of four surgery centers in the community, the administrator is concerned with his rates in relation to those of his competitors. Givens: Budgeteda Actual Surgical volume 1,500 1,700 Gift shop revenues $15,000 $17,000 Surgery revenues $500,500 $750,750 Parking revenues $15,000 $17,000 Determine the total variance between the planned and actual budgets. Prepare a flexible budget estimate for surgical volume;surgical revenue per unit and surgical revenue Determine the volume variance for surgical revenues and the rate variance for surgical revenues Determine the per unit rate variance for surgical revenue
Casper Hospital bases its budgets on patient-visits. The hospital's static planning budget for May appears below: The budgeted number of patient-visits 5,100 Budgeted variable costs: Supplies (@ $2.70 per patient-visit) $ 13,770 Laundry (@ $3.00 per patient-visit) 15,300 Budgeted fixed costs: Wages and salaries 16,830 Occupancy costs 16,890 Total expense $ 62,790 Required: Prepare a flexible budget for 6,000 patient-visits per month.
Capelli Hospital bases its budgets on patient-visits. The hospital's static budget for August appears below: Budgeted number of patient-visits 8,300 Budgeted variable costs: Supplies (@$8.40 per patient-visit) $ 69,720 Laundry (@$8.10 per patient-visit) 67,230 Total variable cost 136,950 Budgeted fixed costs: Wages and salaries 99,630 Occupancy costs 107,630 Total fixed cost 207,260 Total cost $ 344,210 Budgeted number of patient-visits 8,300 Budgeted variable costs: Supplies (@$8.40 per patient-visit) $ 69,720 Laundry (@$8.10 per patient-visit) 67,230 Total variable cost 136,950 Budgeted fixed costs: Wages and salaries 99,630 Occupancy costs 107,630 Total fixed cost 207,260 Total cost $ 344,210 What is total variable cost at activity level of 8,400 patient visits per month?
Akey Hospital bases its budgets on patient-visits. The hospital's static budget for March appears below: Budgeted number of patient-visits 2,700 Budgeted variable overhead costs: Supplies (@$3.90 per patient-visit) $10,530 Laundry (@$9.70 per patient-visit) 26,190 Total variable overhead cost 36,720 Budgeted fixed overhead costs: Wages and salaries 15,660 Occupancy costs 35,640 Total fixed overhead cost 51,300 Total budgeted overhead cost $88,020 The total overhead cost at an activity level of 3,000 patient-visits per month should be:
Sharifi Hospital bases its budgets on patient-visits. The hospital's static budget for October appears below: Budgeted number of patient-visits 9,500 Budgeted variable overhead costs: Supplies (@$5.20 per patient-visit) $ 49,400 Laundry (@$8.20 per patient-visit) 77,900 Total variable overhead cost 127,300 Budgeted fixed overhead costs: Wages and salaries 52,900 Occupancy costs 85,800 Total fixed overhead cost 138,700 Total budgeted overhead cost $ 266,000 The total overhead cost at an activity level of 10,200 patient-visits per month should be
Subject : Accounting Classic Hospital bases its budgets on patient-visits. The hospital's static budget forSeptember appears below: Budgeted number of patient-visits ............. 9,8000Budgeted variable overhead costs:Supplies (@ $2.20 per patient-visit) ....... $21,780Laundry (@ $1.10 per patient-visit) ....... 10,890Total variable overhead cost ...................... 32,670Budgeted fixed overhead costs:Salaries.................................................... 30,710Occupancy costs ..................................... 12,000Total fixed overhead cost........................... 42,710 Total budgeted overhead cost .................... $99,000 Actual results for the month were:Actual number of patient-visits.................. 11,000Supplies...................................................... $28,040Laundry ...................................................... $11,640Salaries ....................................................... $32,480Occupancy…
The administrator of Break-a-Leg Hospital is aware of the need to keep his costs down because he just negotiated a new capitated arrangement with a large insurance company. Below are selected planned and actual expenses for the previous month. Givens: Budgeteda Actual A Patient days 27,000 26,000 B Pharmacy $120,000 $160,000 C Miscellaneous supplies $66,000 $77,500 D Fixed overhead costs $808,000 $880,000 1. Prepare a flexible expense estimate for variable costs. . Flexible budget estimate. Budgeted Flexible Actual Patient days 27,000 26,000 Cost per patient day $6.89 $9.13 Total cost $186,000 $237,500 2. Compute the volume variance.3. Compute the cost variance. 4. Compute the per unit cost variance. 5. Is the unfavorable variance caused by the volume of patients or the cost…
Children's Hospital of the King's Daughters Health System in Norfolk, Virginia, introduced a new budgeting method that allowed the hospital's annual plan to be updated for changes in operating plans. For example, if the budget was based on 400 patient-days (number of patients × number of days in the hospital) and the actual count rose to 450 patient-days, the variable costs of staffing, lab work, and medication costs could be adjusted to reflect this change. The budget manager stated, “I work with hospital directors to turn data into meaningful information and effect change before the month ends.” What budgeting method is being used under the new approach? What budgeting method do you think was being used under the old method?
The controller of Conrad Aiken Surgical Center was reviewing monthly financial reports and noted some differences. The center had fallen 8 short of its plan to perform 450 procedures during the month. Despite that shortfall, surgical revenue exceeded the $830,250 budget, coming in at $848,640. 1. Construct the flexible budget estimate for revenue, procedures, and revenue per procedure. Budgeted Flexible Actual A. Revenue 830,250 848,640 B. Procedures 450 442 C. Revenue per procedure $1,845 $1,920 2. Calculate the revenue volume variance. 3. Calculate the revenue rate variance . 4. Is the unfavorable variance caused by volume or by the rate? Enter VOLUME or RATE as your answer.
Question: Assume that an HMO's capitation payment to PCPs is $20 PMPM, but 15% of this amount is placed in the PCP risk pool. The budgeted amount for specialty and hospital costs is $40 PMPM. The purpose of the risk pool is to encourage the PCPs to take actions that cause realized specialty and hospital costs to be less than those budgeted. Cost is measured by the amount the HMO spends on each physician's referral. There are three PCPs: Physician A, Physician B, and Physician C. Assume that each physician has 1,000 patients. Suppose Physician A's actual referral costs are $500,000, Physician B's are $540,000, and Physician C's are $620,00. Finally, suppose that no PCP will receive any funds from the risk pool if it is empty at the end of the year, but if there are referral funds left in the risk pool at the end of the year, they will be divided equally among the three physicians. 1) What is the amount of referral gain (loss) for Physician A? a. -$100,000 b. -$36,000 c. -$20,000 d.…
jacobsville Hospital has budgeted costs of $850,000 in diagnostic imaging. The total estimated activity-based usage is 2,500 images. Total costs for the entire hospital are estimated to be $3,000,000. The activity rate per image is a. $340b. $1,200c. $860d. $1,540