Budgeting is an important activity within every health care organization. The particular challenges encountered, however, can vary depending on the type of organization. A state or federally funded organization, for example, will likely have a budget that is allocated to it, and it needs to follow specific guidelines on how the money can be used. A for-profit organization, by contrast, will typically have more influence and flexibility in setting up its budget and making choices on matters such as how much to spend on marketing, patient care, or incentives for employees.

In addition to preparing budgets, as a health care administrator, you must also be able to evaluate whether or not you have achieved your budget using variance analysis. This is important because variance analysis measures the differences between the budget and actual results, and provides administrators with a starting point for correcting financial performance. For this Assignment, conduct a variance analysis for a health care organization.

Examine the budgeted and actual revenues and expenses for a hospital. Reflect on concepts of budgeting and variance.

Using the"Week 9 Assignment Budget and Variance Excel Template"address the following:

1. Determine the total variance between the planned and actual budgets forSurgical Volume. Is the variance favorable or unfavorable?
2. Determine the total variance between the planned and actual budgets forPatient Days. Is the variance favorable or unfavorable?
3. Determine the service-related variance forSurgical Volume.
4. Determine the service-related variance forPatient Days.
5. Create a flexible budget estimate. Present a side-by-side budget, flexible budget estimate, and the actualSurgical Revenues.
6. Create a flexible budget estimate. Present a side-by-side budget, flexible budget estimate, and the actualPatient Expenses.
7. Determine what variances are due to change in volume and what variances are due to change in rates.

Revenues Expenses Givens: Budgeted Actual Givens: budgeted Actual Surgical volume Patient days Gift shop revenues IBI Pharmacy ICI Surgery revenues ICI Miscellaneous supplies Parking revenues IDI Fixed overhead costs 1. Determine the total variance between the planned and actual budgets for Surgical Volume. Is the variance favorable 2. Determine the total variance between the planned and actual budgets for Patient Days. Is the variance favorable or or unfavorable? Unfavorable? Budgeted Actual Variance Variance IEI Surgical volume [A] IE Patient days [A] IFI Gift shop revenues [BI IFI Pharmacy [B] IGI Surgery revenues [CI IGI Miscellaneous supplies (C] Parking revenues [DI THI Fixed overhead costs [DI Total variance [ E] Total variance 3. Determine the service related variance for Surgical Volume. 4. Determine the service related variance for Patient Days. Variance Variance 1JI Total variance Total variance jo [KI Gift shop revenue variance [ F] IKI Art. explained by fixed overhead [HI ILI Parking revenue variance [H] ILI Other fixed expenses IM] Service-related variance [J-K-L] IMI Service-related variance [J-K-L] 5. Prepare a flexible budget estimate. Present side-by-side budget, flexible budget estimate, and the actual surgical revenues. 6. Prepare a flexible budget estimate. Present side-by-side budget, flexible budget estimate, and the actual patient expenses. Budgeted Flexible Actual Budgeted Flexible Actual IN Surgical volume [A] IN Patient days [Al 101 Surgical revenue per unit [C / A] Cost per patient day (Pharm + Mise] [B+CI/IAI Surgical revenue [ C] Total cost (Pharm+Misc] [N x O] 7. Determine what variances are due to change in volume and what variances are due to change in rates. Budgeted Flexible Actual Variance Budgeted surgical revenue [P] [R] Flexible surgical revenue [PI ISI Actual surgical revenue [P] ITI Volume variance [R - Q] Rate variance [S - R]