Question
The emergency room at Wellsley General Hospital uses a flexible budget based on patients seen as the measure of activity. The hospital must maintain an
The emergency room at Wellsley General Hospital uses a flexible budget based on patients seen as the measure of activity. The hospital must maintain an adequate staff of attending and on-call physicians at all times so patient activity does not affect physician scheduling. Nurse scheduling varies as volume changes, however. A standard of 0.4 nurse hours per patient visit was set. Hourly pay for nurses ranges from $9 to $18 per hour, and the average pay rate is $ 12 per hour. The hospital considers all materials to be supplies, a part of overhead; there are no direct materials. A statistical study showed that the cost of supplies and other variable overhead is more closely associated with nurse-hours than with patient visits. The standard for supplies and other variable overhead is $ 14 per nurse hour. The head physician of the emergency room unit, Brad Burke, is responsible for control of costs. During October the emergency room unit treated 3 comma 900 patients. The budget and actual costs were as follows:
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