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Palmer Home Health Agency expects to contract with an integrated delivery system for an estimated 36,000 members. The IDS expects 12% of its members to use the home health service in any given month. The budgeted rate per visit is $30. At the end of the first year of the contract the CEO of the Palmer's reviewed the activity on the contract and determined the following: the actual number of members was 10% higher than budgeted and the actual monthly revenue was $118,800. What are the volume variance and rate variance experienced, and are these variances favorable or unfavorable?
A. volume variance = $23,760 unfavorable; rate variance = $12,960-favorable
B. volume variance = $10,800 favorable; rate variance = $21,600 unfavorable
C. volume variance = $12,960 favorable; rate variance = $23,760 unfavorable
D. volume variance = $21,600 unfavorable; rate variance = $10,800 favorable
E. none of the above
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