Calculate Revenue Variance And Expense Variance
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Question
Painless Dentists (Painless) expected to treat 6,000 patients during 2011. The practice expected each patient to need an average of 3 X-rays at a cost to Painless of $11 per X-ray. Painless charges Patients $20 for each X-ray. The actual activity reports for 2011 showed that 5,500 patients came to the clinic and received an average of 3.25 X-rays with an average per X-ray cost of $10.50. For this question there is no need to do an adjusted budget, simply do the difference between the actual and budgeted figures.
- What is Painless’ revenue variance? Is the total revenue variance favorable or unfavorable? Why?
- What is Painless’ expense variance? Is the total expense variance favorable or unfavorable? Why?
- Was the net impact of the two variances helpful or harmful to the economic health of the organization? Why?
Summary
The question belongs to Finance and it discuses about calculating revenue variance, expense variance and the impact of the two variances on the organization.
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