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](https://secure.tutorsglobe.com/CMSImages/1254_bugdet%20cost%20table.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.