Arcadia Hospital's 2005 Budget
Determine the revenue variance from Arcadia Hospital’s 2005 budget. Is the variance positive or negative?
Upon reviewing the Arcadia Hospital Income Statement for the year of 2005, I would say that the variance is negative because the actual budget for 2005 $568 million minus the budget of $596 million equals a negative amount of $28 million under budget, which means less revenue. In other word, revenues were $28 million below budget, therefore the variance is negative.
Which is desirable, a positive or negative variance? Why?
Because this is revenue being discussed it is desirable to be positive. With a positive variance that would mean Arcadia brought in more revenue; however, if it is a negative variance it means less revenue
Upon reviewing the Arcadia Hospital Income Statement for the year of 2005, I would say that the variance is negative because the actual budget for 2005 $568 million minus the budget of $596 million equals a negative amount of $28 million under budget, which means less revenue. In other word, revenues were $28 million below budget, therefore the variance is negative.
Which is desirable, a positive or negative variance? Why?
Because this is revenue being discussed it is desirable to be positive. With a positive variance that would mean Arcadia brought in more revenue; however, if it is a negative variance it means less revenue