HEALTHCARE FINANCE ACCOUNTING QUESTION.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.

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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.

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

$100,000

$4.167

$140,000

Misc Supplies Costs Variable

$56,000

$2.333

$67,500

Fixed Overhead Costs

$708,000

$29.50

$780,000

Total

$864,0000

$36.00

$987,500

a. Determine the total variance associated with the planned and actual expenses.


 

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