6.2 Following are the budgets of Brandon Surgery Center for the most recent historical
quarter (in thousands of dollars):
Simple
Flexible
Actual
Number of surgeries
1,200
1,300
1,300
Patient revenue
$2,400
$2,600
$2,535
Salary expense
$1,200
$1,300
$1,365
Nonsalary expense
$ 600
$ 650
$ 585
Profit
$ 600
$ 650
$ 585
The center assumes that all revenues and costs are variable and hence tied directly
to patient volume.
a. Explain how each amount in the flexible budget was calculated. (Hint: Examine the simple budget to determine the relationship of each budget line to
volume.)
b. Determine the variances for each line of the P&L statement, both in dollar
terms and in percentage terms.
c. What do the results in part b tell Brandon's managers about the center's operations for the quarter?
