# 8.1 Newark general hospital

8.1 Newark general hospital.zip - (49.29 KB)
[
8.1 Newark general hospital/8.1 Newark general hospital.xlsx
8.1 Newark general hospital/Question.txt
8.1 Newark general hospital/Screenshot_1.png
]

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
b. Calculate and interpret the revenue variance.
HENT – Revenue Variance = [Actual Revenues – Static Revenues]
c. Calculate and interpret the cost variance.
HENT – Cost Variance = [Static Cost – Actual Cost]
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 =?
HENT -Price variance = Actual revenues-Flexible revenues
Price Variance=?
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) =?
HENT -Management variance = Flexible costs – Actual costs
Management Variance =?
f. How are the variances calculated above related?

### Write a Review

Get a fresh solution of this question. Ask it now to our experts.