# Determine the utilization variance for the month. 19. Determine the efficiency variance for the month.

You have been asked to explain the causes for a change in the char Show more Variance Analysis Project 6. You have been asked to explain the causes for a change in the charges for MS-DRG 445 from 2006 to 2011. Charge profiles are presented below: Units Provided Charge/Unit Total Charge 2006 2011 2006 2011 2006 2011 Routine Care 10 7 $200 $400 $2000 $2800 Special Care 2 1 400 560 800 560 Pharmacy 1 1 95 125 95 125 Radiology 9 1 65 585 585 585 CT Scan 0 1 300 300 0 300 Lab 1 1 185 185 185 185 $3665 $4555 Compute price and efficiency variances for all departments. Use the following data to calculate the variances in problems 710. You have been asked by management to explain the variances in costs under your inpatient capitated contract. The following data is provided. Budget Actual Inpatient Costs $12568500 $16618350 Members 42000 42000 Admission Rate 0.070 0.095 Case Mix Index 0.90 0.85 Cost per Case (CMI = 1.0) $4750 $4900 7. What dollar amount of the total variance is attributed to Enrollment Variance? 8. What dollar effect did the increased admission rate have on cost? 9. The intensity of care delivered dropped from a budgeted case mix of 0.90 to an actual case mix of 0.85. What dollar effect did this have on actual costs? 10. Costs per case increased to $4900 from a budgeted value of $4750. This increased actual total costs by what amount? Use the following data to calculate the variances in problems 1113. The following information has been prepared for a home health agency: Budget Actual Wage Rate per Hour $16.00 $17.00 Fixed Hours 320 320 Variable Hours per Relative Value Unit (RVU) 1.0 1.1 Relative Value Units (RVUs) 1000 1200 Total Labor Hours 1320 1640 Labor Costs $21120 $27880 Cost per RVU $21.12 $23.23 Budgeted costs at actual volume would be $25344 ($21.12 1200) and the total variance to be explained is $2536 Unfavorable ($27880 $25344). Be sure to specify whether the variance is favorable or unfavorable. 11. What is the amount of variance that is attributed to the difference between the budgeted and actual wage rate per hour? 12. What is the amount of variance that is attributed to the change in labor productivity? 13. What is the amount of variance that can be attributed to the difference between budgeted and actual volume? Use the following information for problems 1416. The administrator of Appomattox Nursing Home is very aware of needing to keep his cost down since he just negotiated a new arrangement with a large insurance company that will pay him a fixed amount per patient day. Listed below are budgeted and actual expenses for the previous month. Actual patient days were 30000 compared to budgeted patient days of 24000. Budgeted Costs @ 24000 Patient Days Budgeted Cost Per Unit Actual Costs @ 30000 Patient Days Pharmacy Costs Variable $100000 $4.167 $140000 Misc Supplies Costs Variable $56000 $2.333 $67500 Fixed Overhead Costs $708000 $29.50 $780000 Total $8640000 $36.00 $987500 14. Determine the total variance associated with the planned and actual expenses. 15. Prepare a flexible budget of expense at 30000 patient days. 16. Determine the Spending Variance which is defined as Actual costs less costs budgeted at actual volume. Use the following information for problems 1719. A dermatology clinic expects to contract with an HMO for an estimated 80000 enrollees. The HMO expects 1 in 4 of its enrolled members to use the dermatology services per month. At the end of the year the dermatology clinics business manager looked at her monthly figures and saw that the number of enrolled members had increased by 5% over the budgeted amount and that 1 in 3 of the total HMO members had used the dermatology services per month. Actual and budgeted statistics are presented below. The total variance is $70000 and is unfavorable: Budgeted Actual Enrollees 80000 84000 Usage Rate 0.25 0.3333 Visits 20000 28000 Cost $200000 $270000 Cost Per Visit $10.00 $9.643 17. Determine the enrollment variance for the month. 18. Determine the utilization variance for the month. 19. Determine the efficiency variance for the month. Show less

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