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ACCA Applied Skills · Financial Reporting · Not-for-profit and public sector entities

A hospital trust spent $2,400,000 on running a clinic and treated 12,000 patients. It had budgeted to spend $2,520,000 for 12,000 patients. Which statement is correct regarding its performance?

Actual cost per patient was $200 (2,400,000 divided by 12,000) against a budgeted $210 (2,520,000 divided by 12,000). The clinic therefore spent $10 less per patient, showing better economy or efficiency, with the same number of patients treated.

  1. ACost per patient was $200, which is $10 below the budgeted $210, indicating better economy or efficiency in resource useCorrect
  2. BCost per patient was $200, which is $10 above the budget of $190
  3. CCost per patient was $210, which is $10 above the budget of $200
  4. DCost per patient was $2,400, which is under budget by $120

Explanation

Actual cost per patient is 2,400,000/12,000 = $200. Budget is 2,520,000/12,000 = $210. The actual is $10 lower, so the clinic used resources more cheaply for the same output. The other options reverse the figures or use wrong divisors.

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