Question

•Calculate the variance analysis for the information provided below using this problem and the formula provided to you.

Data:

	Budget	Actual	Variance
Total Payroll Cost	$65,600.00	$78,627.50	$13,027.50
Total Nursing Hours	1600	1850	250
Composite Hourly Pay Rate	$30.00	$33.00	$3.00
Patient Days	350	375	25

Formulas to use in calculations for variance analysis:

Step #1: Compute the Efficiency Variance.

Budgeted nursing hours   / Budgeted patient days = HPPD Budgeted

Actual nursing hours / Actual patient days = HPPD Actual

HPPD Actual - HPPD Budgeted

Actual patient days X extra nursing care hours = Total extra

Total extra X Budgeted hourly wage = Efficiency (in dollars)

Step #2: Compute the volume variance.

Actual patient days - Budgeted patient days = A

A X Budgeted HPPD = B

B X Budgeted pay = V (dollars)

Step #3: Compute the cost variance.

Actual $ paid - Budgeted $ paid = D

D X Actual hours worked = C (dollars)

Step #4: Calculate the Budget Variance.

Efficiency + Volume + Cost = Budget Variance

Answer 1

Step #1: Compute the Efficiency Variance.
Budgeted nursing hours   / Budgeted patient days = HPPD Budgeted	4.57
Actual nursing hours / Actual patient days = HPPD Actual	4.93
HPPD Actual - HPPD Budgeted	0.36
Actual patient days X extra nursing care hours = Total extra	135.71
Total extra X Budgeted hourly wage = Efficiency (in dollars)	$              4,071.43
Budgeted nursing hours	1,600.00
Budgeted patient days	350.00
Actual nursing hours	1,850.00
Actual patient days	375.00
extra nursing care hours	0.36
Budgeted hourly wage	30.00
Actual hourly wage	33.00
Step #2: Compute the volume variance.
Actual patient days - Budgeted patient days = A	25.00
A X Budgeted HPPD = B	114.29
B X Budgeted pay = V (dollars)	$              3,428.57
Step #3: Compute the cost variance.
Actual $ paid - Budgeted $ paid = D	3.00
D X Actual hours worked = C (dollars)	$              5,550.00
Step #4: Calculate the Budget Variance.
Efficiency + Volume + Cost = Budget Variance	$           13,050.00