Bessey Hospital bases its budgets on patient-visits. The hospital's static planning budget for January appears below:
-The spending variance for occupancy costs in the flexible budget performance report for the month is:

Question

Bessey Hospital bases its budgets on patient-visits. The hospital's static planning budget for January appears below: 
-The spending variance for occupancy costs in the flexible budget performance report for the month is:

Quizplus · Accepted Answer

To find the spending variance for occupancy costs, we need to compare the actual occupancy costs for the month with what should have been incurred based on the flexible budget.

Flexible budget for occupancy costs: 
Variable cost per patient-visit = $65
Budgeted patient-visits for January = 2,000
Flexible budget for occupancy costs = $65 x 2,000 = $130,000

Actual occupancy costs for January = $129,670

Spending variance = Actual occupancy costs - Flexible budget for occupancy costs 
= $129,670 - $130,000 
= $330 U (Unfavorable)

Therefore, the correct answer is C.

Bessey Hospital Bases Its Budgets on Patient-Visits