The following are planned and actual revenues for Cutting Edge Surgery Center. Because they are one of four surgery centers in the community, the administrator is concerned with his rates in relation to those of his competitors. Givens: Budgeteda Actual Surgical volume 1,500 1,700 Gift shop revenues $15,000 $17,000 Surgery revenues $500,500 $750,750 Parking revenues $15,000 $17,000 Determine the total variance between the planned and actual budgets. Prepare a flexible budget estimate for surgical volume;surgical revenue per unit and surgical revenue Determine the volume variance for surgical revenues and the rate variance for surgical revenues
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.
The following are planned and actual revenues for Cutting Edge Surgery Center. Because they are one of four surgery centers in the community, the administrator is concerned with his rates in relation to those of his competitors.
|
Givens: |
Budgeteda |
Actual |
||
|
Surgical volume |
1,500 |
1,700 |
||
|
Gift shop revenues |
$15,000 |
$17,000 |
||
|
Surgery revenues |
$500,500 |
$750,750 |
||
|
Parking revenues |
|
$15,000 |
|
$17,000 |
- Determine the total variance between the planned and actual budgets.
- Prepare a flexible budget estimate for surgical volume;surgical revenue per unit and surgical revenue
- Determine the volume variance for surgical revenues and the rate variance for surgical revenues
- Determine the per unit rate variance for surgical revenue
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