8.2 Briefly describe the planning process. Be sure to include summaries of the strategic, operating, and financial plans.
8.7 What is variance analysis?
Problems (found on the Assignment #8 Word document):
8.1 Consider the following 2015 data for Newark General Hospital (in millions of dollars):
A table lists the static budget, flexible budget, and actual results, in that order, for Revenues, Profits, and Costs. All values given in dollars.
Calculate and interpret the profit variance.
Calculate and interpret the revenue variance.
Calculate and interpret the cost variance.
Calculate and interpret the volume and price variances on the revenue side.
Calculate and interpret the volume and management variances on the cost side.
How are the variances calculated above related?
8.3 Here are the budgets for Brandon Surgery Center for the most recent historical quarter (in thousands of dollars):
A table lists static, flexible, and actual budgets in that order for Number of Surgeries, Patient Revenue, Salary Expense and nonsalary Expense.
The center assumes that all revenues and costs are variable and hence tied directly to patient volume.
Explain how each amount in the flexible budget was calculated. (Hint: Examine the static budget to determine the relationship of each budget line to volume.)
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 price variance [for revenues] and a management variance [for expenses].)
What do the Part b results tell Brandon’s managers about the surgery center’s operations for the quarter?
