Question

PROBLEM 1: Flexible Budget and Variances - 40 Points GSU Health Services uses patient-visits as its measure of activity. During July, the clinic budgeted for 2,700 patient.visits at a price to the patient of $49.50 per patient-visit. The actual level of activity for the month of July was 3,200 patient-visits. The clinic uses the following cost formulas in its budgeting: Personnel expenses Medical supplies Administrative expenses Fored Cost Per Month $31,200 $10,700 $7,000 Cost per patient visit $15.10 $11.60 $0.20 The clinic reported the following actual results for July: RUI - NOT Average operating so Revenue Personnel Expenses Medical Supplies Administrative Expenses $165,680 $76,190 $49,750 $7,600 wa Required: Residual inune: Prepare a report in the space below for the month of July. The report must show the clinic's actual results in one column, the flexible budget in the next column, and revenue and spending variances in the last column. All variances must be labeled as favorable (F) or unfavorable (U). Use good form, as we did in class. Each row used must be labeled (revenue, personnel expenses, net operating income, etc.). Use total expenses (fixed + variable) in your flexible budget. Actual Amounts 165,680 Flexible Budget S Variance Amount Revenue/Expense Label Revenue Expenses favorable (F)/Unfavorable (U)

Answer 1

Revenue/Expense label	Actual amounts	Flexible budget	Varience Amount	Favourable (F)/Unfavourable (U)
Revenue	165680	158400	7280	F
Personnel expenses	76190	79520	-3330	U
Medical supplies	49750	47820	1930	F
Administrative expenses	7600	7640	-40	U

Calculation of flexible budget amounts,

1. Revenue = no. Of patients visits actual * 49.5 that is 3200*49.5
2. Personnel expenses = Fixed + variable = 31200 +(3200*15.1)
3. Medical supplies = Fixed + variable = 10700 + (3200*11.6)
4. Administrative expenses = Fixed + variable = 7000 + (3200*.2)