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445
MBA 13–5
1. January: 49,000 patient beds used (24,500 patients × 2.0 nights)
2. January: 55,800 available patient beds: 1,800* beds per day × 31 days
3. January: 87.8% (49,000 patient beds used ÷ 55,800 available patient beds)
MBA 13–6
446
MBA 13–7
1. Year 3: 83.6% (117,500 miles ÷ 140,501 miles)
MBA 13–8
Delta’s average passenger load factor is higher at 84.5% [(84.9 + 84.7 + 83.8) ÷ 3]
447
CASES
Case 13–1
Bud should reject Ellen’s request to charge the convention-related costs against
February’s budget. This is just one example of many attempts to slide expenses
Case 13–2
1. The hospital’s new budget method is clearly an example of a flexible budget.
The budget changes with changes in underlying activity, such as patient-
448
Case 13–3
1. The budget information indicates that the actual expenditures by the Opera-
2. The bank manager does not know how the actual resources consumed by the
Operations Department compare to what would have been budgeted for the
actual activities performed. In other words, this budget doesn’t say anything
449
Case 13–4
Domino’s could use a master budget to plan operations consistent with the sales
forecast. The sales forecast could be used to develop the production budget for
pizzas. The sales and production budgets would be identical since there would be
450
Case 13–5
1. The amount of actual expenditures was less than budget for the first 10
months of the budget year. As the end of the budget year-end neared, the
2. The budget system encourages this type of wasteful behavior. The budget
could be redesigned in a number of ways. The budget could be designed to
flex with underlying activity and adjusted monthly. Thus, the manager would
always have budgeted resources for changes in underlying activity. For ex-
451
Case 13–6
The use of ideal standards is a legitimate concern for Everett. It is likely that such
standards are too tight and do not include the necessary fatigue factors that are
likely in this type of operation. It seems as though Everett is arguing for practical
Case 13–7
The plant manager is placing pressure on the controller because the controllable
variance is unfavorable. The claim is that these costs are not variable at all. This
claim is difficult to accept. This small company purchases its power from the out-
