Detailed variance analysis. The administrator of Break-a-Leg Hospital is aware of the need to keep costs down because he has just negotiated a new capitated arrangement with a large insurance company. The following are selected planned and actual expenses for the previous month.

a. Determine the total variance associated with the planned and actual expenses.

b. Calculate the amount of service-related variance.

c. Prepare a flexible expense estimate for variable costs. Compare budgeted amount, flexible budget, and actual amount (show related volumes).

d. Determine what variance is due to change in volume and what variance is due to change in rates.

e. Determine the volume variance and rate variance based on per unit rates.

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Givens Planned Actual Patient days 27,000 26,000 Pharmacy $120,000 $160,000 Miscellaneous supplies $66,000 $77,500 Fixed overhead costs $808,000 $880,000