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Variance Analysis


Question 5 (10 marks) It is now May and you have been asked to do a budget for The Flu Shot clinicas the flu season will soon begin.The clinic will operate for the months of June and July. As the hospital has no spare space it will rent a room in a nearby shopping centre for the clinic. The clinic will also employ a nurse to give the injections and a receptionist to assist with arranging interviews. Vaccines cost $10 per patient. In addition, the clinic will give each patient either regularor glow-in-the-dark band aids. A regular bandaid is budgeted at $1, while aglow-in-the-dark band aid is budgeted at $2. Children always request glow-in-the-dark band aids.It is anticipated that the clinic will receive $40 for each child and $30 for each adult. During last year’s flu season, the department saw 400 adults and 700 children each month and operated for 2 months. The nurse is paid $5 per child and $3 per adult and the receptionist is paid $500 per month.Rent and utilities are $300 per month. a. Using this information do a budget for the clinic for June and July. b. The actual results for this clinic are shown below. Management want to know why the budgeted result and actual results for each month are different. Do a budget variance analysis for each month to identify what caused the actual and budgeted amounts to be different. You are told that in June the clinic actually saw 500 adults and 900 children, and in July the clinic saw 200 adults and 500 children. c. Write a brief report to your manager summarising your findings and give recommendations for how to prepare the budget for next year.