EBK FINANCIAL & MANAGERIAL ACCOUNTING
13th Edition
ISBN: 9780100545052
Author: WARREN
Publisher: YUZU
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Chapter 21, Problem 21.2CP
a.
To determine
Budgeting is a process to prepare the financial statement by the manager to estimate the organization’s future actions. It is also helpful to satisfy the everyday activities.
To explain: the budgeting methods that are being used under the new approach.
b.
To determine
To explain: the reason for these methods being superior to the former approach.
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Casper Hospital bases its budgets on patient-visits. The hospital's static planning budget for May appears below:
The budgeted number of patient-visits
5,100
Budgeted variable costs:
Supplies (@ $2.70 per patient-visit)
$
13,770
Laundry (@ $3.00 per patient-visit)
15,300
Budgeted fixed costs:
Wages and salaries
16,830
Occupancy costs
16,890
Total expense
$
62,790
Required:
Prepare a flexible budget for 6,000 patient-visits per month.
Children's Hospital of the King's Daughters Health System in Norfolk, Virginia, introduced a new budgeting method that allowed the hospital's annual plan to be updated for changes in operating plans. For example, if the budget was based on 400 patient-days (number of patients × number of days in the hospital) and the actual count rose to 450 patient-days, the variable costs of staffing, lab work, and medication costs could be adjusted to reflect this change. The budget manager stated, “I work with hospital directors to turn data into meaningful information and effect change before the month ends.”
What budgeting method is being used under the new approach?
What budgeting method do you think was being used under the old method?
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 21 Solutions
EBK FINANCIAL & MANAGERIAL ACCOUNTING
Ch. 21 - Prob. 1DQCh. 21 - Briefly describe the type of human behavior...Ch. 21 - What behavioral problems are associated with...Ch. 21 - What behavioral problems are associated with...Ch. 21 - Under what circumstances would a static budget be...Ch. 21 - How do computerized budgeting systems aid firms in...Ch. 21 - Why should the production requirements Set forth...Ch. 21 - Prob. 8DQCh. 21 - A. Discuss the purpose of the cash budget. B. If...Ch. 21 - Give an example of how the capital expenditures...
Ch. 21 - Flexible budgeting At the beginning of the period,...Ch. 21 - Prob. 21.1BPECh. 21 - Prob. 21.2APECh. 21 - Prob. 21.2BPECh. 21 - Direct materials purchases budget My Life...Ch. 21 - Prob. 21.3BPECh. 21 - Direct labor cost budget MyLife Chronicles Inc....Ch. 21 - Prob. 21.4BPECh. 21 - Prob. 21.5APECh. 21 - Prob. 21.5BPECh. 21 - Prob. 21.6APECh. 21 - Prob. 21.6BPECh. 21 - Personal budget At the beginning of the 2016...Ch. 21 - Flexible budget for selling and administrative...Ch. 21 - Static budget versus flexible budget The...Ch. 21 - Prob. 21.4EXCh. 21 - Prob. 21.5EXCh. 21 - Prob. 21.6EXCh. 21 - Prob. 21.7EXCh. 21 - Prob. 21.8EXCh. 21 - Direct materials purchases budget Romano's Frozen...Ch. 21 - Prob. 21.10EXCh. 21 - Prob. 21.11EXCh. 21 - Direct labor cost budget Ace Racket Company...Ch. 21 - Prob. 21.13EXCh. 21 - Production and direct labor cost budgets Levi...Ch. 21 - Prob. 21.15EXCh. 21 - Cost of goods sold budget Delaware Chemical...Ch. 21 - Cost of goods sold budget The controller of...Ch. 21 - Schedule of cash collections of accounts...Ch. 21 - Schedule of cash collections of accounts...Ch. 21 - Schedule of cash payments for a service company...Ch. 21 - Schedule of cash payments for a service company...Ch. 21 - Capital expenditures budget On January 1, 2016,...Ch. 21 - Forecast sales volume and sales budget For 2016,...Ch. 21 - Sales, production, direct materials purchases, and...Ch. 21 - Budgeted income statement and supporting budgets...Ch. 21 - Cash budget The controller of Sonoma Housewares...Ch. 21 - Budgeted income statement and balance sheet As a...Ch. 21 - Prob. 21.1BPRCh. 21 - Sales, production, direct materials purchases, and...Ch. 21 - Budgeted income statement and supporting budgets...Ch. 21 - Cash budget The controller of Mercury Shoes Inc....Ch. 21 - Prob. 21.5BPRCh. 21 - Prob. 21.1CPCh. 21 - Prob. 21.2CPCh. 21 - Static budget for a service company A bank manager...Ch. 21 - Objectives of the master budget Dominos Pizza LLC....Ch. 21 - Integrity and evaluating budgeting systems The...
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