Grinzaid Home Nursing specializes in home nursing services. It bases its overhead on the flexible budget cost function of $33,000 + ($2.40 x labor hours). Normal volume is based on 12,000 labor hours. Standards call for 2 labor hours per patient visited.For the current period, the operating results were as follows: actual labor hours worked 11,400, patient visits 5,800, actual variable overhead costs $28,460, actual fixed overhead costs $31,950. How much of the budget variance is due to variable costs?
Grinzaid Home Nursing specializes in home nursing services. It bases its overhead on the flexible budget cost function of $33,000 + ($2.40 x labor hours). Normal volume is based on 12,000 labor hours. Standards call for 2 labor hours per patient visited.For the current period, the operating results were as follows: actual labor hours worked 11,400, patient visits 5,800, actual variable overhead costs $28,460, actual fixed overhead costs $31,950. How much of the budget variance is due to variable costs?
Chapter1: Financial Statements And Business Decisions
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Grinzaid Home Nursing specializes in home nursing services. It bases its overhead on the flexible budget cost function of $33,000 + ($2.40 x labor hours). Normal volume is based on 12,000 labor hours. Standards call for 2 labor hours per patient visited.For the current period, the operating results were as follows: actual labor hours worked 11,400, patient visits 5,800, actual variable overhead costs $28,460, actual fixed overhead costs $31,950. How much of the budget variance is due to variable costs?
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