| Static |
Flexible |
Actual |
| number of surgeries |
1,200 |
1,300 |
1,300 |
| patient revenue |
$2,400 |
$2,600 |
$2,535 |
| salary expense |
1,200 |
1,300 |
1,365 |
| non-salary expense |
600 |
650 |
585 |
| profit |
$ 600 |
$650 |
$585 |
The center assumes that all revenues and costs are variable and hence tied directly to patient volume
a. Explain how each amount in the flexible budget was calculated. (hint examine the static budge to determine the relationship of the each budge line to volume).
b. Determine the variances for each line of the profit and loss statement, both in dollar terms and in percentage terms.
(hint: each line has a total variance, a volume variance, and a management variance).
c. What do the Part b results tell Brandon's managers about the surgery center's operations for the quarter?