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Problem: The administrator of Appomattox Nursing Home is extremely aware of needing to keep his cost down because he just negotiated a new arrangement with a large insurance company which will pay him a fixed amount per patient day. Listed below are budgeted and actual expenses for previous month.

Actual patient days were 30,000 compared to budgeted patient days of 24,000.

1254_bugdet cost table.jpg

1. Find out the total variance associated with planned and actual expenses.

2. Make a flexible budget of expense at 30,000 patient days.

3. Find out the “Spending Variance” which is defined as Actual costs less costs budgeted at actual volume.

 

Financial Accounting, Accounting

  • Category:- Financial Accounting
  • Reference No.:- M93494

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