HLTH 8401 Week 9 Assignment: Budgeting and Variance Analysis
This Assignment aligns to the NCHL domain of Health System Awareness & Business Literacy. Specifically, it focuses on the second level of the Financial Skills Competency: “Manages and Assists the Budgeting Process.” For more information on how this icon aligns to the NCHL Health Leadership Competency Model 3.0, refer to the MHA Iconography page.
Note: Your Instructor will post the document for this Assignment by Monday of Week 9 in the Announcements.
Budgeting is an important activity within every healthcare organization. The particular challenges encountered, however, can vary depending on the type of organization. A state or federally funded organization, for example, will likely have a budget that is allocated to it, and it needs to follow specific guidelines on how the money can be used. A for-profit organization, by contrast, will typically have more influence and flexibility in setting up its budget and making choices on matters such as how much to spend on marketing, patient care, or incentives for employees.
In addition to preparing budgets, as a healthcare administrator, you must also be able to evaluate whether or not you have achieved your budget using variance analysis. This is important because variance analysis measures the differences between the budget and actual results and provides administrators with a starting point for correcting financial performance. For this Assignment, you conduct a variance analysis for a healthcare organization.
Resources
Be sure to review the Learning Resources before completing this activity.
To prepare for this Assignment:
- Review the Week 9 Assignment document provided to you by the Instructor. Examine the budgeted and actual revenues and expenses for a hospital. Reflect on concepts of budgeting and variance.
- Review Chapter 5, Chapter 11, and Chapter 14 of Gapinski’s Understanding Healthcare Financial Management.
By Sunday
Submit your “Week 9 Assignment Budget and Variance Excel Template,” to address the following:
- Determine the total variance between the planned and actual budgets for Surgical Volume. Is the variance favorable or unfavorable?
- Determine the total variance between the planned and actual budgets for Patient Days. Is the variance favorable or unfavorable?
- Determine the service-related variance for Surgical Volume.
- Determine the service-related variance for Patient Days.
- Prepare a flexible budget estimate. Present a side-by-side budget, flexible budget estimate, and the actual Surgical Revenues.
- Prepare a flexible budget estimate. Present a side-by-side budget, flexible budget estimate, and the actual Patient Expenses.
- Determine what variances are due to change in volume and what variances are due to change in rates.
Refer to the Week 9 Assignment Rubric for specific grading elements and criteria. Your Instructor will use this grading rubric to assess your work.
submission information
Before submitting your final assignment, you can check your draft for authenticity. To check your draft, access the Turnitin Drafts from the Start Here area.
- To submit your completed assignment, save your Assignment as WK9Assgn_LastName_FirstInitial
- Then, click on Start Assignment near the top of the page.
- Next, click on Upload File and select Submit Assignment for review.
SOLUTION HLTH 8401 Week 9 Assignment: Budgeting and Variance Analysis
| Revenues | |||||||||
| Givens: | Budgeted | Actual | |||||||
| [A] | Surgical volume | 2,800 | 2,700 | ||||||
| [B] | Gift shop revenues | $19,000 | $19,000 | ||||||
| [C] | Surgery revenues | $925,500 | $850,750 | ||||||
| [D] | Parking revenues | $16,000 | $15,000 | ||||||
| 1. Determine the total variance between the planned and actual budgets for Surgical Volume. Is the variance favorable or unfavorable? | |||||||||
| Budgeted | Actual | Variance | |||||||
| [E] | Surgical volume [A] | 2,800 | 2,700 | (100) | |||||
| [F] | Gift shop revenues [B] | $19,000 | $19,000 | $0 | |||||
| [G] | Surgery revenues [C] | $925,500 | $850,750 | ($74,750) | |||||
| [H] | Parking revenues [D] | $16,000 | $15,000 | ($1,000) | |||||
| [I] | Total variance [E] | ||||||||
| 3. Determine the service related variance for Surgical Volume. | |||||||||
| Variance | |||||||||
| [J] | Total variance [I] | ($75,850) | |||||||
| [K] | Gift shop revenue variance [F] | $0 | |||||||
| [L] | Parking revenue variance [H] | ($1,000) | |||||||
| [M] | Service-related variance [J-K-L] | ($74,850) | |||||||
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