Acc – you have been asked by management to explain the variances in

                                                  

You have been asked by management to explain the variances in costs under your n patient capitated contract. The following data is provided. Use the following data to calculate the variances.

 

Budget

Actual

Inpatient Costs

$12,568,500

$16,618,350

Members

42,000

42,000

Admission Rate

0.070

0.095

Case Mix Index

0.90

0.85

Cost per Case (CMI = 1.0)

$4,750

$4,900

 

 

 

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

 

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

 

Problem 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?

 

Problem 4: Costs per case increased to $4,900 from a budgeted value of $4,750. This increased actual total costs by what amount?

 

Problem 5: Using the information in the table below, calculate the amount of the unfavorable rate variance. Then select the letter from the list below that shows the correct answer.

 

 

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

 

Problem 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.

 

 

 

BudgetedActualVariance

 

Volume1,0001,100100

 

Supplies$10,000$12,750$2,750

 

Fixed Labour$20,000$22,250$2,250

a) $ 900
b) $1,000
c) $1,050
d) $1,250
e) $1,500

 

 

 

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