Healthcare Financial Management and Economics

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

Patients Days

27,000

27,000

Pharmacy

$120,000

$160,000

Misc Supplies

$66,000

$77,500

Fixed Overhead Costs

$808,000

$880,000

Expenses

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.

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