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Question - Providence Hospital generates monthly performance reports for each of its departments. The hospital must maintain an adequate staff of attending and on-call physicians at all times, so physician costs are not affected by the number of patient visits. But all other costs do vary with patient activity. Nurse-hours are used as the activity measure for nursing costs, and patient visits are used as the activity measure for the cost of supplies and other variable costs.
The head physician of the hospital's emergency room, Yolanda Mortensen, is responsible for control of costs. During October, the emergency room unit expected to treat 3,700 patients but actually treated 4,200 patients. The following additional information for October is available:
Budget
Actual
Variance
Nurse-hours
1,480
1,764
-284
Nursing costs
$37,000
$33,800
$3,200
Supplies & other variable costs
$40,700
$25,700
$15,000
Fixed costs
$97,000
$93,500
$3,500
Required - Compute the flexible-budget variances for fixed costs.
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