# Planning and budgeting

**Question description**

** Consider the following 2007 data for Newark General
Hospital (in millions of dollars):**

- Static Budget: Revenues $4.7; Costs $4.1; Profit $0.6
- Flexible Budget: Revenues $4.8; Costs $4.1; Profit $0.7
- Actual Results: Revenues $4.5; Costs $4.2; Profit $0.3

**a)** Calculate and interpret the profit variance.

**b)** Calculate and interpret the revenue variance.

**c)** Calculate and interpret the cost variance.

**d)** Calculate and interpret the volume and price
variances on the revenue side.

**e)** Calculate and interpret the volume and
management variances on the cost side.

**f)** How are the variances calculated above
related?

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