CHAPTER 15 PROBLEMS

1. Flexible budget. The Chief Nurse Executive of a hospital is interested in making a quick assessment about performance for the year. The nursing department budget for the year was $10 million and actual expenses were $14 million. However, department fixed costs were budgeted at $4 million. The hospital expected to have 1000 admissions. The hospital actually had 1300 admissions.

a. What were the budgeted variable costs per patient?

b. What is the flexible budget for 1,300 patients?

c. How much over or under budget was the hospital, taking into account the volume of patients? Be sure to indicate “over” or “under” as well as giving the amount in your answer.

2. The following are the nursing department labor costs for a home health agency for the month of March:

Actual Budget Variance
$22,815 $17,250 $5,565 U

Budgeted visits = 1,250
Actual visits = 1,500
Budgeted nurse hours per visit = 0.60
Actual nurse hours per visit = 0.65
Budgeted nurse pay rate = $23.00/hour
Actual nurse pay rate = $23.40/hour

Calculate the price, quantity, and volume variances. Hint: They should add up to the total variance of $5,565.