HPHA 5311

Chapter 8: Financial Planning & Budgeting

Homework Problem 3.5

Calculate each of the following based upon the data below:

Total Revenue

Static Budget = $1,980,000

Flexible Budget = $2,060,000

Actual Results = $2,050,000

Total Costs

Static Budget = $1,350,000

Flexible Budget = $1,675,000

Actual Results = $1,790,000

Projected Profit

Static Budget = $630,000

Flexible Budget = $1,675,000

Actual Results = $1,790,000

a. profit variance

b. revenue variance

c. cost variance

revenue variances

d. volume variance

e. price variance

cost variance

f. volume variance

g. management variance

h. Discuss the factors involved with the profit variance

i. Explain the factors contributing to the volume variance

j. Explain the factors contributing to the cost variance