Healthcare Financial Management and Economics Week 9 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.