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 nursing 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 3,500 patients but actually treated 3,800 patients. The following additional information for October is available: Budget Actual Variance Nurse-hours 2,100 2,356 -256 $50,400 $34,700 Nursing costs Supplies & other variable costs Fixed costs $15,700 $7,900 $35,000 $27,100 $94,000 $104,300 $-10,300 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

Answer 1

	Flexible budget variance = actual - flexible budget
	Nursing costs
	34,700 -	(50400/2100)*2356
	34700-	56544
	21844	F
	answer	21,844
	Supplies and other variable costs
	27,100-	35000/3500*3800
	27,100-	38000
	10900	F
	answer	10,900
	Fixed costs
	-10,300	answer