Question

Rocky Mountain General Hospital serves three counties in Colorado. The hospital is a nonprofit organization that is supported by patient billings, county and state funds, and private donations. The hospital's organization is shown in the following chart. Rocky Mountain General Hospital General Medicine Division Surgical Division Medical Support Division Administrative Division Nursing Department Nutrition Department Housekeeping Department Radiology and Laboratory Department Maintenance Department Kitchen Registered Dietitians' Section Food Service Section Patient Food Service Cafeteria Actual Year to August Date $ $ The following cost information has been compiled for August. Budget Year to August Date Cafeteria: Food servers' wages $ 8,000 $ 64,000 Paper products 4,500 36,000 Utilities 1,000 8,000 Maintenance 400 3,200 Custodial 1,100 8,800 Supplies 1,200 9,600 Patient Food Service 17,000 136,000 Registered Dietitians' 7,500 60,000 Section Kitchen 31,000 248,000 Nursing Department 70,000 560,000 Radiology and 18,000 144,000 Laboratory Department Housekeeping 10,000 80,000 Department Maintenance Department 13,000 104,000 General Medicine 210,000 1,680,000 Division Surgical Division 140,000 1,120,000 Administrative Division 50,000 400,000 9,000 4.400 1,050 100 1,100 900 18,500 7,500 29,400 75,000 18,100 72,000 36,200 8,100 1,100 8,600 9,600 137,000 60,000 246,000 580,000 144,000 11,600 6,000 204,000 141,000 53,500 86,000 77,000 1,670,900 1,115,800 406,000 Required: 1. Prepare a set of cost performance reports. 3. As the Hospital Administrator, which variances in the performance reports would you investigate?

Answer 1

1	Cost performance report of Rocky mountain general hospital
			Budget			Budget			Under (Over) budget
	Department		August	YTD August		August	YTD August		August	YTD August
	Cafeteria
	Food servers wages		8,000	64,000		9,000	72,000		1,000	8,000
	Paper product		4,500	36,000		4,400	36,200		-100	200
	Utilities		1,000	8,000		1,050	8,100		50	100
	Maintenance		400	3,200		100	1,100		-300	-2,100
	Custodial		1,100	8,800		1,100	8,600		-	-200
	Supplies		1,200	9,600		900	9,600		-300	-
	Patient food service		17,000	1,36,000		18,500	1,37,000		1,500	1,000
	Registered dietitians section		7,500	60,000		7,500	60,000		-	-
	Kitchen		31,000	2,48,000		29,400	2,46,000		-1,600	-2,000
	Nursing department		70,000	5,60,000		75,000	5,80,000		5,000	20,000
	Radiology and laboratory department		18,000	1,44,000		18,100	1,44,000		100	-
	Housekeeping department		10,000	80,000		11,600	86,000		1,600	6,000
	Maintance department		13,000	1,04,000		6,000	77,000		-7,000	-27,000
	General medicine division		2,10,000	16,80,000		2,04,000	16,70,900		-6,000	-9,100
	Surgical division		1,40,000	11,20,000		1,41,000	11,15,800		1,000	-4,200
	Administrative division		50,000	4,00,000		53,500	4,06,000		3,500	6,000
	Total		5,82,700	46,61,600		5,81,150	46,58,300		-1,550	-3,300
2	As hotel Administrator, the variances substantial in nature would investigated for reason and adjustment for flexibility in future budget to achieve the desired year end result. Following department variances are investigated to ascertain to reason and incorporation in rolling forecast.
	Under budgeting in
	Nursing department
	Administrative division
	Housekeeping department
	Food servers wages
	Over budgeting in
	Maintance department
	General medicine division