Data for Newark General Hospital Essay

A. Calculate and interpret the profit variance. earnings departure = Actual Profit stable Profit= 0.3 0.6= -0.3In words Newark General hospital was $300,000 below standard, and made less profit than their expectations.B. Calculate and interpret the Revenue variance.Revenue divergency = Actual Revenues Static Revenues = 4.5 4.7= -0.2In words Newark General Hospital was $200,000 below standard, and generated less revenues than their expectations.C. Calculate and interpret the Cost variance.Cost Variance = Static cost Actual Costs= 4.1 4.2= 0.1In words Newark General Hospitals $100,000 cost variance indicates that realized cost was much greater than expected.D. Calculate and interpret the passel and scathe variance on the revenue side.Volume Variance = Flexible Revenues Static Revenues = 4.8 4.7= 0.1 cost Variance = Actual Revenues Flexible Revenues = 4.5 4.8= -0.3These variances tell that higher(prenominal) than expected volume should have go outed in revenues being $1 00,000 greater than expected. However, this potential revenue increase was partially offset by fact that realized prices were less than expected. The end result of higher volume at land prices is realized revenue that was $200,000 less than forcasted.E. Calculate and interpret the Volume and management variances on the cost sides.Volume Variance = Static Costs Flexible Costs= 4.1 4.1= 0In words Newark General Hospital had no affect of volume to the costs of the Hospital, so, there was no change in the volume, which leaded to higher cost.Management Variance = Flexible Costs Actual Costs=4.1 4.2 = -0.1In words, in the Hospital cost overproduction happened by some factor which are either controllable or can be controlled by management.F. How are the variances calculated above related?Explaining variances in financial statements is vital to the success of a business. Variances are the difference between budgeted amounts and actual income or expenses. Managers use variance reports to make changes infinancial forecasts and monitor lizard the performance of a business or organization. Variance explanations might prompt a manager to put stronger financial controls in place or to apportion resources.8.2 2007 revenues for the Wendover Group Practice Association for four different budgets, in thousands of dollars Flexible Flexible Static Budget (Enrollment/Utilization) (Enrollment) Actual Results Budget Budget $425 $200 $ clxxx $300 A. What does the budget data tell you about the nature of Wendovers patients Are they capitated of fee-for-service? As per the budget data given for Wandovers patients are capitated that is why information is divided into two flexible budgets, i. One for flexed for both enrollment and utilization and, ii. One flexed only for enrollment.B. Calculate and interpret the following variances.i. Revenue Variance= Actual Revenue Static Revenue= 300 425= -125Which indicates negative variance, so that revenue was $125,000 less than exp ected. ii. Volume Variance= Flexible Revenues Static Revenues= 200 425= -225iii. Price Variance= Actual Revenues Flexible Revenues= 300 200= 100Here lower than expected volume should have resulted in revenuebeing $225,000 lower than expected, however, this potential revenue decrease was partially offset by the fact that realized prices were more than expected. The end result of lower volume at higher prices is realized revenue that was $125,000 less than forecasted. iv. Enrollment Variance= Flexible (Enrollment revenues) Static revenues = 180 424= -245v. Utilization Variance= Flexible Revenues (Enrollment/Utilization) Flexible = 200 180= 20The volume variance can be broken down further. Enrollment changes (deficiencies) caused a $245,000 shortfall from budget. However, utilization by the enrolled population was slightly down, which produced $20,000 in unheralded profit. Together, the enrollment shortfall and utilization decrease resulted in a volume shortfall of $225,000. I n essence, some of the enrollment deficiency was offset by returns in utilization control.