Here are the budgets of Brandon Surgery Center for the most recenthistorical quarter (in thousands of dollars):
StaticFlexibleActual
Number of surgeries1,200 1,3001,300
Patient revenue$2,400$2,600$2,535
Salary expense1,2001,3001,365
Non-salary expense600650585
Profit$600$650$585
The center assumes that all revenues and costs are variable andhence tied directly to patient volume.
a. Explain how each amount in the flexible budget was calculated. (Hint Examine the static budget to determine the relationship of each bud get line to volume.)
b. Determine the variances for each line of the profit and loss statement, both in dollar terms and in percentage terms. (Hint: Each line has atotal variance, a volume variance, and a price variance [for revenues and management variance [for expenses].)
c. What do the Part b results tell Brandon's managers about the surgery center's operations for the quarter?