# 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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