Variance Analysis

860 words - 4 pages

Variance Analysis
A manager of a variable hospital department has many responsibilities. The manager is accountable for budgeting and to protect profits. The financial manager is responsible for guarding overspending and generating profits. They are active in the budgeting process throughout the fiscal year. The budget department manager communicates with other managers, and accounting departments concerning budget issues, financing, and concerns in the organizations departments. Sometimes situations occur whereas payroll salaries are high and supplies are lower than planned and budgeted. The budget manager is responsible for providing feedback about finances, revenue, and any potential variances in the budgeted costs. This essay will be based on a scenario of salaries that were higher and supplies lower than initially budgeted. This paper will explore variances in the scenario mentioned earlier, and explain the relationship between variance reporting, interpreting variance reporting results, and the results of performance within a health care organization.
The hospital variable department has experience a case in which employee salaries are higher than budgeted, while the supplies are lower than initially budgeted. This is the result of an epidemic of asthma patients who were admitted to the hospital over the last three months. The hospital approved overtime to assist in the growing number of patients and to accommodate their needs. In the process of caring for patients more supplies were needed and used. The vice president has asked for a variance report showing the situation at hand. I have decided to write a report and explain my interpretation of the variance report that explains what happened and the outcome.
A variance report is a way for business executives to gauge their company's performance by comparing one set of figures to another. This usually means comparing a planned amount to an actual amount. Most companies have computer systems that generate reports that show variances from the budget. Managers need to be able understand them to report accurately. The managers first establish a budget but more importantly he or she must be able to distinguish differences between actual performances and the budget itself. A variance report is sometimes called monthly operating reports and departmental reports. Within the variance report are the results, the budget, budget variance, and percentage of variance. The report also shows the month and what happened to date. Inside the report will be the figures associated with the titles. Variable costs (for medication and supplies) are saved if a facility does not provide a service whereas fixed costs (for salaried labor, buildings, and equipment) are not saved over the short-term...

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