Thor County Hospital is the only medical facility serving an area with a population of 8,400. In 20X1, the Radiology Department purchased a used CAT scanner from a larger hospital for $50,000. The purchase had not been anticipated when the department’s 20X1 budget was drawn up, and the repair costs for the machine were $7,300 more than the expected $40,300. There were 680 scans performed rather than the 600 budgeted, and revenue was $300 less per scan than the $2,600 expected. During that period, additional temporary staff had to be used, which increased the variable costs per scan from $275 budgeted to an unexpected $475 per scan. Nonvariable expenses were budgeted at

$40,300, and the repairs were the only variance.

a. Is the nonvariable expense variance favorable or unfavorable? What is the amount?

b. What is the unexplained cost-related variance?

c. Create a flexible budget for revenue.

d. What is the revenue rate variance? Is it favorable or unfavorable? What is the volume variance? Is it favorable or unfavorable?

e. Create a flexible budget for the variable cost.

f. What is the cost variance? Is it favorable or unfavorable? What is the volume variance due to cost? Is it favorable or unfavorable?