Problem:
Painless Dentists (Painless) expected to treat 6,000 patients during 2011. The practice expected each patient to need an average of 3 X-rays at a cost to Painless of $11 per X-ray. Painless charges Patients $20 for each X-ray. The actual activity reports for 2011 showed that 5,500 patients came to the clinic and received an average of 3.25 X-rays with an average per X-ray cost of $10.50. For this question there is no need to do an adjusted budget, simply do the difference between the actual and budgeted figures.
- What is Painless' revenue variance? Is the total revenue variance favorable or unfavorable? Why?
- What is Painless' expense variance? Is the total expense variance favorable or unfavorable? Why?
- Was the net impact of the two variances helpful or harmful to the economic health of the organization? Why?
Additional Information:
This question is basically belongs to the Finance as well as it explains about computing revenue variance, expense variance and impact of the two variances on the organization.