q.28

Here are the budgets of North Rock Ambulatory Care Facility for the most recent historical quarter:

StaticFlexibleActualNumber of surgeries1,5001,8001,800Patient revenue$3,000,000$3,600,000$3,200,000Salary expense$1,600,000$1,920,000$2,100,000Nonsalary expense$750,000$800,000$825,000Profit$650,000$880,000$275,000

Determine the Profit Variance and interpret the result.

a. The profit variance is -$375,000 which was driven by the positive revenue variance being insufficient to cover the negative cost variance.

b. The profit variance is -$605,000 which was driven by the positive revenue variance being insufficient to cover the negative cost variance.

c. The profit variance is $375,000 which was driven by the positive revenue variance.

d. The profit variance is $605,000 which was driven by the positive revenue variance.