You have been asked by management to explain the variances

You have been asked by management to explain the variances in costs under your inpatient capitates contract. The following data is provided.

Requirements:

1: What dollar amount of the total variance is attributed to Enrollment Variance?

2: What dollar effect did the increased admission rate have on cost?

3: 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?

Budgeted

Actual

Volume

200,000

190,000

Revenue per unit

$40

$37

Revenue

$8,000,000

$7,030,000

a) $400,000

b) $570,000

c) $970,000

d) $600,000

e) Cannot calculate with given information

6: Using the information in the table below, determine how much of the supplies variance is due to a change in volume. Then select the letter from the list below that shows the correct answer.

Budgeted

Actual

Variance

Volume

1,000

1,100

100

Supplies

$10,000

$12,750

$2,750

Fixed labor

$20,000

$22,250

$2,250

$5,000

a) $ 900

b) $1,000

c) $1,050

d) $1,250

e) $1,500