Question

1. Estimate the flexible budget
2. Calculate the revenue variance, volume variance, price variance
3. Calculate the profit variance, revenue variance and cost variance
4. Explain what results show with respect to the profit and revenue variances

	Static	Actual
Patient Visits	1,000	900
Net Patient Revenue	$10,000	$9,100
Variable Costs	$6,000	$5,580
Contribution Margin	$4,000	$3,520
Fixed Costs	$3,000	$2,900
Operating Income	$1,000	$620

Answer 1

Computation of flexible budget :

	Budgeted	Actual	Variance
Patient visit	900	900
Net patient revenue	9000	9100	100 (favourable)
Variable cost	5400	5580	180(unfavorable)
Contribution margin	3600	3520	80(unfavorable)
Fixed cost	3000	2900	100(favourable)
Operating income	600	620	20(favourable)

Revenue variance:

Actual revenue - static budget revenue

9100 - 10000

900 ( unfavorable)

Volume variance:

standard price ( actual quantity - standard quantity)

10(900 - 1000)

1000 ( unfavorable)

Price variance:

Actual quantity ( actual price - standard price)

900 ( 10.11 - 10 )

100 (favourable)

profit variance:

Actual profit - budgeted profit

620 - 600

20 ( favourable)

Cost variance:

standard cost - actual cost

8400 - 8480

80 ( unfavorable)

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