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 calculated. (hint: examine the simple budget to determine the relationship of each budget line to volume. Determines the variance for each line of the P&L statement, both in dollar terms and percentage terms. What do the results in part b tell The Bronx Surgery Center’s managers about the center’s operations for quarter
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 calculated. (hint: examine the simple budget to determine the relationship of each budget line to volume.
- Determines the variance for each line of the P&L statement, both in dollar terms and percentage terms.
- What do the results in part b tell The Bronx Surgery Center’s managers about the center’s operations for quarter?
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