Comments on a performance report The Victorial Hospital is located in a holiday resort that attracts visitors to such an extent that the population of the area is trebled for the summer months of June, July and August. From past experience, this influx of visitors doubles the activity of the hospital during these months. The annual budget for the hospital’s laundry department is broken down into four quarters, namely April–June, July–September, October–

December and January–March, by dividing the annual budgeted figures by four. The budgeting work has been done for the current year by the secretary of the hospital using the previous year’s figures and adding 3 per cent for inflation. It is realized by the Hospital Authority that management information for control purposes needs to be improved, and you have been recruited to help to introduce a system of responsibility accounting.

You are required, from the information given, to:

(a) comment on the way in which the quarterly budgets have been prepared and to suggest improvements that could be introduced when preparing the budgets for the next year

(b) state what information you would like to flow from the actual against budget comparison (note that calculated figures are not required)

(c) state the amendments that would be needed to the current practice of budgeting and reporting to enable the report shown below to be used as a measure of the efficiency of the laundry manager.

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Victorial Hospital - Laundry Department Report for quarter ended 30 September Patients days Weight processed (kg) Budget Actual 9,000 12,000 180,000 240,000 () () Costs: Wages 8,800 12,320 Overtime premium 1,400 2,100 Detergents and other supplies 1,800 2,700 Water, water softening and heating 2,000 2,500 Maintenance 1,000 1,500 Depreciation of plant 2,000 2,000 Manager's salary 1,250 1,500 Overhead, apportioned: for occupancy for administration 4,000 4,250 5,000 5,750