8.1 Consider the following 2015 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

1. Calculate and interpret the profit variance.
2. Calculate and interpret the revenue variance.
3. Calculate and interpret the cost variance.
4. Calculate and interpret the volume and price variances on the revenue side.
5. Calculate and interpret the volume and management variances on the cost side.
6. How are the variances calculated above related?

8.2 Here are the 2015 revenues for the Wendover Group Practice Association for four different budgets (in thousands of dollars):

Static Budget

$425

Flexible (Enrollment/ Utilization) Budget

$200

Flexible (Enrollment) Budget

$180

Actual Results

$300

b. Calculate and interpret the following variances:

1. Revenue variance

2. Volume variance

3. Price variance

4. Enrollment variance

5. Utilization variance