Question

If a Company has a the Following variances for June compared to all of 2018.

Discuss significant changes between June and YTD performance, that is, which line items are moving closer or away from their budget targets?

June: Staff salaries and wages

Price Variance (196,333 actual cost/ 8,174 actual hours) – (184,167 budgeted cost/ 7790 budgeted hours) * 8,174 hours paid

                                                (24.02/hour          -           23.64/hour) * 8,174 hours paid

                                          0.38 unplanned cost per hour * 8,174 hours paid= 3,106.12 Price variance

Efficiency Variance (8174 actual hours/ 531 actual patient days - 7790 budgeted hours/ 536 budgeted patient days) * 184,176 budgeted cost/ 7790 budgeted hours * 531 actual patient days

                                       (15.39 – 14.53) *23.64/ budget hour * 531 actual patient days

                                               0.86 * 23.64 * 531 = 10,795.44 Efficiency Variance

Intensity Variance (531 actual patient days/ 108 actual admissions – 536 budgeted patient days /108 budgeted output) * 184,176 budgeted cost/ 536 budgeted patient days * 108 actual admissions

                                       (4.92 – 4.96) * 343.61 * 108

                                    -0.04 * 343.61 * 108 = -1484.40 Intensity Variance   

Volume Variance (108 actual admissions – 108 budgeted admissions) * 184,167 actual cost/ 108 budgeted admissions

                 0 unexpected admissions * 1,705.25 = 0 Volume Variance

2018: Staff salaries and wages

Price Variance (1,235,642 actual cost/ 51,378 actual hours) – (1,105,000 budgeted cost/46,743 budgeted hours) * 51,378 hours paid

                                            (24.05/hour        -       23.64/hour) * 51,378 hours paid

                                           0.41 unplanned cost per hour * 51,378 hours paid = 3,351.34 Price Variance

Efficiency Variance (51,378 actual hours/ 3,295 actual patient days – 46,743 budgeted hours/ 3,213 budgeted patient days) * 1,105,000 budgeted cost /46,743 budgeted hours * 3,295 actual patient days

      (15.59 - 14.55) * 23.64/ budget hour * 3,295 actual patient days                

                              1.04 * 23.64 * 3,295 = 81,009.55 Efficiency Variable

Intensity Variance ( 3,295 actual patient days/ 678 actual admissions – 3213 budgeted patient days/ 650 budgeted output) * 1,105,000 budgeted cost/ 3213 budgeted patient days * 678 actual admissions

                                     (4.86 - 4.94) * 343.92 * 678

                                  -0.08 * 343.92 * 678 = 18,654.22 Intensity Variance

Volume Variance (678 actual admissions – 650 budgeted admissions) * 1,105,000 budgeted cost/ 650 budgeted admissions

                                  28 unexpected admissions * 1,700 = 47,600 Volume Variance

Answer 1

Significant changes in June, that is, which line items are moving closer or away from their budget targets in June

1. Price per hour of 24.02 is moving close to the budget of 23.64 per hour.

2.Actual cost and Actual hours are moving away from the budgeted hours and cost

3. Actual budgeted patient days are moving away from the actual patient days

4. Actual admissions are equal to budgeted admissions.

Significant changes in YTD, that is, which line items are moving closer or away from their budget targets

1. Actual cost and actual hours are moving away from budgeted hours and cost
2. Actual patient days are more than budgeted patient days
3. Actual patient admissions are more than budgeted patient admissions.