Isadore Hospital Bases Its Budgets on Patient-Visits -What Is the Variance for Laundry Costs in the Flexible

question 118

Multiple Choice

Isadore Hospital bases its budgets on patient-visits. The hospital's static budget for July appears below:
$\begin{array}{|l|r|}\hline \text { Actual number of patient-visits } & 7,800 \\\hline \text { Supplies } & \$ 38,250 \\\hline \text { Laundry } & \$ 61,240 \\\hline \text { Salaries } & \$ 46,190 \\\hline \text { Occupancy costs } & \$ 65,650 \\\hline\end{array}$


-What is the variance for laundry costs in the flexible budget performance report for the month?

• A) $5,080 F
• B) $5,080 U
• C) $5,800 U
• D) $5,800 F

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Definitions:

CAPM

Capital Asset Pricing Model, a theory that delineates the correlation between expected return on investments and the inherent systematic risk, especially in the context of equities.

Security Characteristic Line

Represents a regression line that displays the relationship between a security's returns and the market's returns, used to assess risk and performance.

Security Market Line

A representation of the capital asset pricing model (CAPM) which displays the expected return of a security as a function of its systematic, or non-diversifiable, risk.

Cyclical Beta

A measure of how sensitive a stock's price is to economic cycles, with higher values indicating greater sensitivity.