Assignment- Budgeting and Variance Analysis
Healthcare Financial Management and Economics
Instructions:
The following are budgeted and actual revenues and expenses for a hospital.
Budgeted Actual
Revenues
Surgical Volume 2,500 2,700
Gift Shop Revenues $19,000 $20,000
Surgery Revenues $600,500 $850,750
Parking Revenues $16,000 $18,000
Expenses
Patients Days 27,000 27,000
Pharmacy $120,000 $160,000
Misc Supplies $66,000 $77,500
Fixed Overhead Costs $808,000 $880,000
Using an Excel spreadsheet to show your calculations:
1. Determine the total variance between the planned and actual budgets for Surgical Volume. Is the variance favorable or unfavorable?
2. Determine the total variance between the planned and actual budgets for Patient Days. Is the variance favorable or unfavorable?
3. Determine the service-related variance for Surgical Volume.
4. Determine the service-related variance for Patient Days.
5. Prepare a flexible budget estimate. Present a side-by-side budget, flexible budget estimate, and the actual Surgical Revenues.
6. Prepare a flexible budget estimate. Present a side-by-side budget, flexible budget estimate, and the actual Patient Expenses.
7. Determine what variances are due to change in volume and what variances are due to change in rates.