Gamma Healthcare Services

Managerial Accounting Process: Cost Variance Analysis

Cost Category	Budgeted Amount ($ million)	Actual Amount ($ million)
Medical Supplies	35	40
Salaries	60	55
Administrative	12	14
Facility Maintenance	18	20

Requirements:

1. Variance Analysis:
   • Calculate the total variance and the price and efficiency variances for each cost category at Gamma Healthcare Services.

1. Flexible Budgeting:
   • Prepare a flexible budget for Gamma Healthcare Services based on the actual activity level, assuming a 15% increase in patient visits from the budgeted level.

1. Performance Evaluation:
   • Evaluate the performance of each department at Gamma Healthcare Services based on the variances identified in the cost variance analysis.

1. Cost Control Measures:
   • Recommend two cost control measures that Gamma Healthcare Services could implement to reduce the overall cost variances identified.

1. Strategic Cost Management:

Discuss how Gamma Healthcare Services can use variance analysis to improve its cost management strategies and operational efficiency