Thor County Hospital is the only medical facility serving an area with a population of 8400. In 20x1, the Radiology Department purchased a used CAT canner from a larger hospital for $50,000. The purchase had not been anticipated when the department's 20x1 budget was drawn up, and the repair costs for the machine were $7500. There were 780 scans performed rather than the 700 budgeted, and revenue was $200 less per scan than the $2800 expected. During that period, additional temporary staff had to be used, which increased the variable costs per scan from $300 budgeted to an unexpected $500 per scan. Nonvariable expenses were budgeted at $50,000, and the repairs were the only variance.

1. What is the revenue rate variance? is it favorable or unfavorable? What is the volume variance? Is it favorable or unfavorable?

2. Create a flexible budget for the variable cost.

3. What is the cost variance? what is the volume variance due to cost?