Question

can you show me how you got your answer no excel equations also

How are the variances related? udgets of Brandon Surgery Center for the most recent historical Following are the budgets of Bra arter (in thousands of dollars): Actual Number of surgeries Patient revenue Salary expense Nonsalary expense Profit Simple 1,200 $2,400 $1,200 $ 600 $ 600 Flexible 1,300 $2,600 $1,300 $ 650 $ 650 1,300 $2,535 $1,365 $ 585 $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: Exam- ine the simple budget to determine the relationship of each budget line to volume.) b. Determine the variances for each line of the P&L statement, both in dollar terms and in percentage terms. C. What do the results in part b tell Brandon's managers about the center's opera- tions for the quarter?

Answer 1

a.

	Simple	Per Surgery	Flexible
Number of surgeries	1200		1300
Patient revenue	$       2,400	$           2.00	$    2,600
Salary expense	$       1,200	$           1.00	$    1,300
Nonsalary expense	$           600	$           0.50	$        650
Profit	$           600	$           0.50	$        650

Working:

Per Surgery rate = Simple/Number of surgeries = Simple/1200

Flexible = Number of surgeries x Per surgery rate = 1300 x Per surgery rate

	Simple	Per Surgery	Flexible
Number of surgeries	1200		1300
Patient revenue	2400	=2400/1200	=2*1300
Salary expense	1200	=1200/1200	=1*1300
Nonsalary expense	600	=600/1200	=0.5*1300
Profit	600	=600/1200	=0.5*1300

b.

P&L Statement		Volume Variance			Spending Variance			Total Variance
	Simple	$	%	Flexible	$	%	Actual	$	%
Patient revenue	2400	200F	8.33%	2600	65U	2.50%	2535	135F	5.63%
Salary expense	1200	100U	8.33%	1300	65U	5.00%	1365	165U	13.75%
Nonsalary expense	600	50U	8.33%	650	65F	10.00%	585	15F	2.50%
Profit	600	50F	8.33%	650	65U	10.00%	585	15U	2.50%

Working:

P&L Statement		Volume Variance			Spending Variance			Total Variance
	Simple	$	%	Flexible	$	%	Actual	$	%
Patient revenue	2400	200F	=200/2400	2600	65U	=65/2600	2535	135F	=135/2400
Salary expense	1200	100U	=100/1200	1300	65U	=65/1300	1365	165U	=165/1200
Nonsalary expense	600	50U	=50/600	650	65F	=65/650	585	15F	=15/600
Profit	600	50F	=50/600	650	65U	=65/650	585	15U	=15/600

c. The operations have been unsatisfactory since the patient revenue, and salary expense, have unfavorable variances resulting in an unfavorable total profit variance. Only the nonsalary expense has shown a favorable variance.