Question
For months 1-6 Expenses Cost Cost per patient Staffing 59,400 22 Power 27,000 10 Supplies 54,000 20 Other 8,100 3 6000-2700 = 3300 expected number
For months 1-6
Expenses
Cost
Cost per patient
Staffing
59,400
22
Power
27,000
10
Supplies
54,000
20
Other
8,100
3
6000-2700 = 3300 expected number of patients from month 7-12
Budgeted variable cost
MONTHS 7-12 (3300) UNITS
Expenses
Cost
Cost per unit
Staffing
72600
22
Power
33000
10
Supplies
66000
20
Other
9900
3
Total
181,500
55
Budgeted fixed costs 6/12 budgeted cost
Per patient
Supervision
60000
Depreciation
93600
Other
32400
Total
186,000
56.36
Therefore total overhead cost per patient is = 55 + 56.36= 111.36
PART B.
Variable overhead( actual)
Variable overhead(budgeted)
Variance
203,300
181,500
21,800
Fixedoverhead( actual)
overhead(budgeted)
Variance
203,300
195,000
8,300
The main difference is 3800-3300 which is equal to 500 number of patients. However they could reduce the actual variable cost compared to the budgeted.
Actual variable cost per patient
Budgeted variable cost.
203,300/3800 = 53.5
55
Therefore control overhead cost is better than when compared to its budget.
Total actual cost per patient
Budgeted cost per patient
(195000 + 203300)/ 3800 = 104.82 per patient
111.36
Interpret your results under a) and b). Critically evaluate whether the nursing home exercised good or bad control over its overhead costs. In your explanation, also point out any limitations or assumptions of the current analysis. Advise the management about any additional data and analysis that they could perform to improve the accuracy of the planning and control of
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