What is the component volume variance?
What is the component volume variance?
What is the component volume variance?
8.4 Gapenski Healthcare Finance 280-281 A. Construct Carrolls flexible budget for 2011 B What are the profit variance, revenue variance and cost variance C. Consider the revenue variance. What is the component volume variance? the price variance? D. Bread down the cost variance into volume and management components. E. Bread down the management variance into labor, supplies and fixed costs variance? F. interpret your results. In particular, focus on the differences between the variance analysis here and the Carroll Clinic illustration presented in the chapter Refer to Carroll Clinics 2011 operating budget contained in Exhibit 8.3,Instead of the actual results reported in Exhibit 8.4, assume the resultsreported below: Carroll Clinic: New 2011 Results /. Volume: FFS 34,000 visits Capitated lives 30,000 members Number of member-months 360,000 Actual utilization per member-month 0.12 Number of visits 43,200visits Total actual visits 77,200visits Revenues: A.FFS $28 per visit X 34,000 actual visits$ 952,000 Capitated lives $ 2.75 PMPM X 360,000 actual member-months$ 990,000 C.Total actual revenues $1,942,000 III. Costs: Variable Costs: Labor $1,242,000 (46,000 hours at $27/hour) Supplies 126,000 (90,000 units at $1.40/unit) Total variable costs $ 17.72 ($1,368,000 / 77,200) Fixed Costs Overhead, plant, and equipment $525,000 Total actual costs $1,893,000 Profit & Loss Statement: Revenues: FFS $952,000 Capitated $990,000 Total $1,942,000 Costs: Variable: FFS $602,487 Capitated 765,513 Total $1,368,000 Contribution Margin $574,000 Fixed Costs 525,000 Actual profit $49,000 Construct Carrolls flexible budget for 2011. What are the profit variance, revenue variance, and cost variance? Consider the revenue variance. What is the component volume variance? The price variance? Break down the cost variance into volume and management components. Break down the management variance into labor, supplies, and fixed cost variances. Interpret your results. In particular, focus on the differences between the variance analysis here and the Carroll Clinic illustration presented in the chapter.
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