Budgeting and Variance Analysis

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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 2,600 2,750 Gift Shop Revenues $19,500 $22,000 Surgery Revenues $602,500 $750,000 Parking Revenues $17,000 $19,000 Expenses Patients Days 29,000 27,500 Pharmacy $120,500 $147,000 Misc Supplies $695,000 $786,000 Fixed Overhead Costs $836,000 $887,000

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.