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.