Managerial Accounting

Exercise 2. Almana Hospital uses patient-visits as its measure of activity. The hospital has provided the following report:

		Almana Hospital Comparison of Actual Results to Planning Budget For the Month Ended May 31
	Actual Results		Planning Budget	Flexible Budget	Variances
Patient-visits	2,000		2,300
Revenue ($36.40q)	$76,110		$83,720
Expenses:
Personnel expenses ($20,400 + $10.40q)	43,240		44,320
Medical supplies ($1,100 + $6.60q)	13,990		16,280
Occupancy expenses ($6,400 + $1.50q)	9,800		9,850
Administrative expenses ($2,400 + $0.40q)	3,080		3,320
Total expense	70,110		73,770
Net operating income	$6,000		$9,950

Required:

1. Prepare a flexible budget.
2. Prepare a report showing the hospital's revenue and spending variances for May.
3. Label each variance as favorable (F) or unfavorable (U). Fill in the last column of the table above.