Healthcare Finance Accounting Question
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The administrator of Appomattox Nursing Home is very aware of needing to keep his cost down since he just negotiated a new arrangement with a large insurance company that will pay him a fixed amount per patient day. Listed below are budgeted and actual expenses for the previous month.
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Actual patient days were 30,000 compared to budgeted patient days of 24,000.
||Budgeted Costs @ 24,000 Patient Days
||Budgeted Cost Per Unit
||Actual Costs @ 30,000 Patient Days
|Pharmacy Costs Variable
|Misc Supplies Costs Variable
|Fixed Overhead Costs
a. Determine the total variance associated with the planned and actual expenses.
b. Prepare a flexible budget of expense at 30,000 patient days.
c. Determine the “Spending Variance” which is defined as Actual costs less costs budgeted at actual volume.
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