Healthcare Financial Management and Economics
Assignment - Budgeting and Variance Analysis
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:
- Determine the total variance between the planned and actual budgets for Surgical Volume. Is the variance favorable or unfavorable?
- Determine the total variance between the planned and actual budgets for Patient Days. Is the variance favorable or unfavorable?
- Determine the service-related variance for Surgical Volume.
- Determine the service-related variance for Patient Days.
- Prepare a flexible budget estimate. Present a side-by-side budget, flexible budget estimate, and the actual Surgical Revenues.
- Prepare a flexible budget estimate. Present a side-by-side budget, flexible budget estimate, and the actual Patient Expenses.
- Determine what variances are due to change in volume and what variances are due to change in rates.