Question 1

What was the catheterization lab's profit for a new cardiac catheterization lab that was constructed at Have a Heart Hospital? The investment in this lab was $950,000 in equipment costs and $50,000 in renovation costs. A desired return on investment is 12 percent. Once the lab was operating, 7,000 patients were served in the first year and were charged $640 for each procedure. The annual fixed cost for the catheterization lab is $2 million, and the variable cost is $329 per procedure. Did this profit meet its desired ROI?

Question 2

The following are selected planned and actual expenses for a hospital for the previous month.

Particulars Planned Actual

Patient Days 27,000 26,000

Pharmacy $120,000 $160,000

Misc. Supplies $66,000 $77,000

Fixed Overhead cost $808,010 $880,000

A.Determine the total variance associated with the planned and actual expenses.

B.Calculate the amount of service-related variance.

C.How do I create a flexible expense estimate for variable costs. Compare budgeted amount, flexible budget, and actual amount (show related volumes).

D.Determine what variance is due to change in volume and what variance is due to change in rates.

E.Determine the volume variance and rate variance based on per unit rates.