Here are the budgets of Brandon Surgery Center for the most recent historical quarter (in thousands of dollars):

The center assumes that all revenues and costs are variable and hence tied directly to patient volume.

a. Explain how each amount in the flexible budget was calculated.

b. Determine the variances for each line of the profit and loss statement, both in dollar terms and in percentage terms. 

c. What do the results from part b tell Brandon’s managers about the surgery center’s operations for the quarter?

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Static Flexible Actual Number of surgeries 1,200 1,300 1,300 Patient revenue $2,400 $2,600 $2,535 Salary expense 1,200 1,300 1,365 Nonsalary expense 600 650 585 Profit $ 600 $ 650 $ 585