Question

What does rule of thumb evaluation method mean? no matter how many times i read this, I get different answers..and how would I calculate this or what is the formula for the rule of thumb evaluation method???

I am supposed to compute this example:

Arcadia Hospital
Income Statement
YTD Dec 31, 2005
(Dollars in Millions)
Operating Revenues 2005 % of rev Budget Over/(Under)
Patient revenues 500 550
Allowance for doubtful accounts 13 14
Net patient revenues 488 536
Other Income:
Investments 75 60
Misc 5 0
Total Operating Revenue 568 100.00% 596

Operating expenses:
Wages 200 35.24% 180
Taxes & Benefits 75 13.22% 70
Temporary/Contract Labor 5 0.88% 0
Medical/surgical supplies 25 4.41% 30
Other misc supplies 5 0.88% 5
Dues/subscriptions 3 0.53% 3
Transcription expense 10 1.76% 15
Leases & rentals 50 8.81% 45
Malpractice Insurance 75 13.22% 70
Other Insurance 30 5.29% 32
Professional Fees 20 3.52% 20
Utilities 15 2.64% 10
Maintenance & Repairs 15 2.64% 10
Depreciation/Amortization 7 1.23% 7
Interest Expense 1 0.18% 1
Total Operating Expenses 536 94.45% 498

Net Income 32 5.55% 98