Managerial Accounting: Creating Value in a Dynamic Business Environment
12th Edition
ISBN: 9781260417074
Author: HILTON, Ronald
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Chapter 11, Problem 28E
The controller for Rainbow Children’s Hospital, located in Munich, Germany, estimates that the hospital uses 30 kilowatt-hours of electricity per patient-day, and that the electric rate will be .10 euro per kilowatt-hour. The hospital also pays a fixed monthly charge of 1,000 euros to the electric utility to rent emergency backup electric generators.
Required: Construct a flexible budget for the hospital’s electricity costs using each of the following techniques.
- 1. Formula flexible budget.
- 2. Columnar flexible budget for 30,000, 40,000 and 50,000 patient-days of activity. List variable and fixed electricity costs separately.
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The controller for Rainbow Children's Hospital, located in Munich, Germany, estimates that the hospital uses 37 kilowatt-hours of
electricity per patient-day, and that the electric rate will be 0.25 euro per kilowatt-hour. The hospital also pays a fixed monthly charge
of 3,200 euros to the electric utility to rent emergency backup electric generators.
Required:
Construct a flexible budget for the hospital's electricity costs using each of the following techniques.
1. Formula flexible budget.
2. Columnar flexible budget for 42,000, 52,000 and 62,000 patient-days of activity.
Complete this question by entering your answers in the tabs below.
Required 1
Required 2
Formula flexible budget. (Round per unit to 2 decimal places.)
Total budgeted
monthly
overhead cost
Budgeted variable
-overhead cost per x
activity unit
Total activity
units
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+ overhead cost
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patient days
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The hospital and the health insurance carrier has agreed that the hospital will receive $6000 for every day the consumer is in the hospital. This is an example of what unit of payment?
A)Hospital DRG
B)FFS
C)Global budget
D)Capitation
E)Per diem
Laizure Clinic uses patient-visits as its measure of activity. The clinic bases its budgets on the following information: Revenue should
be $62.90 per patient-visit. Personnel expenses should be $36,400 per month plus $16.50 per patient-visit. Medical supplies should
be $2,700 per month plus $11.90 per patient-visit. Occupancy expenses should be $9,100 per month plus $5.50 per patient-visit.
Administrative expenses should be $4,600 per month plus $3.60 per patient-visit.
The clinic reported the following actual results for November:
Patient-visits
Revenue
Personnel expenses
Medical supplies
Occupancy expenses
Administrative expenses
Required:
2,870
$ 199,240
$ 89,320
$ 40,240
$ 19,350
$ 9,750
Prepare a report showing the clinic's revenue and spending variances for November. Label each variance as favorable (F) or
unfavorable (U). (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect
(i.e., zero variance). Input all amounts…
Chapter 11 Solutions
Managerial Accounting: Creating Value in a Dynamic Business Environment
Ch. 11 - Distinguish between static and flexible budgets.Ch. 11 - Explain the advantage of using a flexible budget.Ch. 11 - Why are flexible overhead budgets based on...Ch. 11 - Distinguish between a columnar and a formula...Ch. 11 - Show, using T-accounts, how production overhead is...Ch. 11 - How have advances in manufacturing technology...Ch. 11 - What is the interpretation of the...Ch. 11 - Jeffries Companys only variable-overhead cost is...Ch. 11 - What is the interpretation of the...Ch. 11 - Distinguish between the interpretations of the...
Ch. 11 - What is the fixed-overhead budget variance?Ch. 11 - What is the correct interpretation of the...Ch. 11 - Describe a common but misleading interpretation of...Ch. 11 - Draw a graph showing budgeted and applied fixed...Ch. 11 - What types of organizations use flexible budgets?Ch. 11 - What is the conceptual problem of applying fixed...Ch. 11 - Distinguish between the control purpose and the...Ch. 11 - Why are fixed-overhead costs sometimes called...Ch. 11 - Draw a graph showing both budgeted and applied...Ch. 11 - Give one example of a plausible activity base to...Ch. 11 - Explain how an activity-based flexible budget...Ch. 11 - Crystal Glassware Company has the following...Ch. 11 - Refer to the data in the preceding exercise. Use...Ch. 11 - Crystal Glassware Company has the following...Ch. 11 - The following data are the actual results for...Ch. 11 - Evening Star, Inc. produces binoculars of two...Ch. 11 - The controller for Rainbow Childrens Hospital,...Ch. 11 - You recently received the following note from the...Ch. 11 - You brought your work home one evening, and your...Ch. 11 - Refer to DCdesserts.coms activity-based flexible...Ch. 11 - Montoursville Control Company, which manufactures...Ch. 11 - Prob. 33ECh. 11 - The following data pertain to Aurora Electronics...Ch. 11 - Calgary Paper Company produces paper for...Ch. 11 - Gibralter Insurance Company uses a flexible...Ch. 11 - Country time Studios is a recording studio in...Ch. 11 - Newark Plastics Corporation developed its overhead...Ch. 11 - Johnson Electrical produces industrial ventilation...Ch. 11 - Fall City Hospital has an outpatient clinic....Ch. 11 - Maxwell Company uses a standard cost accounting...Ch. 11 - Mark Fletcher, president of SoftGro, Inc., was...Ch. 11 - LawnMate Company manufactures power mowers that...Ch. 11 - For each of the following independent Cases A and...Ch. 11 - Prob. 45PCh. 11 - Prob. 46PCh. 11 - WoodCrafts, Inc. is a manufacturer of furniture...Ch. 11 - Rutherford Wheel and Axle, Inc. has an automated...Ch. 11 - Chillco Corporation produces containers of frozen...Ch. 11 - Montreal Scholastic Supply Company uses a...Ch. 11 - College Memories, Inc. publishes college...Ch. 11 - While Mountain Sled Company manufactures childrens...Ch. 11 - Cleveland Computer Accessory Company (CCAC)...Ch. 11 - Prob. 54CCh. 11 - Prob. 55C
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