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- Download: http://solutionzip.com/downloads/8-1-newark-general-hospital/
- 8.1 Consider the following 2011 data for Newark General Hospital (in millions of dollars):
- a. Calculate and interpret the profit variance.
- b. Calculate and interpret the revenue variance.
- c. Calculate and interpret the cost variance.
- d. Calculate and interpret the volume and price variances on the revenue side.
- e. Calculate and interpret the volume and management variances on the cost side.
- f. How are the variances calculated above related?
- - Consider the following 2011 data for Newark General Hospital (in millions of dollars):
- Static Budget Flexible Budget Actual Results
- Revenues $4.7 $4.8 $4.5
- Costs 4.1 4.1 4.2
- Profits 0.6 0.7 0.3
- a. Calculate and interpret the profit variance.
- HENT – Profit variance = Actual profit – Static profit
- Answer?
- Interpret your Profit Variance results?
- b. Calculate and interpret the revenue variance.
- HENT – Revenue Variance = [Actual Revenues – Static Revenues]
- Answer?
- Interpret your Revenue Variance results?
- c. Calculate and interpret the cost variance.
- HENT – Cost Variance = [Static Cost – Actual Cost]
- Answer?
- Interpret your Cost Variance results?
- What is the net effect of the revenue and cost variance?
- Hint: Take the revenue +cost variance= profit variance
- d. Calculate and interpret the volume and price variances on the revenue side.
- HENT -Volume variance = Flexible Revenues – Static Revenues
- Volume variance =?
- Interpret your Volume Variance results?
- HENT -Price variance = Actual revenues-Flexible revenues
- Price Variance=?
- Interpret your Price Variance results?
- e. Calculate and interpret the volume and management variances on the cost side.
- HENT -Volume variance (on cost side) = Static costs – Flexible costs
- Volume Variance (on cost side) =?
- Interpret your Volume Variance results?
- HENT -Management variance = Flexible costs – Actual costs
- Management Variance =?
- Interpret your Management Variance results?
- f. How are the variances calculated above related?
- Download: http://solutionzip.com/downloads/8-1-newark-general-hospital/
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