Explain what a variance is, why it is important, and what role it plays in cost...

Explain what a variance is, why it is important, and what role it plays in cost control. Then, find a news article not older than 5 years of a healthcare facility that managed or is managing to control costs. Provide a brief background, reasons why they must control costs, and what they are doing effectively to control costs.

Expert Solution

Variance is the difference between budget and actual expenditure. This analysis is vital to get more realistic picture which leads more accuracy for the coming year budget. Variance helps in evaluating the difference between expected and actual result.

IMPORTANCE OF VARIANCE ANALYSIS

It makes budgeting activates more active and efficient.
If the deviation is lower it will help firm to take detailed decision.
It acts as control mechanism.
It helps in avoiding deviations
It helps in assigning responsibilities

Adopting a creative cost cutting method will give any enterprise an edge over its competitors. It will boost the bottom line of an organization. Cleveland Clinic is an example of healthcare facility that adopts creative cost cutting methods. Few of their cost cutting measures are mentioned below.

They start cutting food waste in half by weighing it.
They start focusing on proper sorting hazardous from non-hazardous waste
They understand the financial benefits of a smoke-free workplace
They reassess administrative costs
They start saving money lost on denied claims
They establish more Standardize and centralize operating and supporting functions.
They start rewarding and recognizing employees’ ideas for savings.

ekkarill92 answered 1 year ago

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