Question

# A hospital manager budgeted \$100,000 for monthly nursing expenses in the hospital’s well-baby clinic. The manager...

A hospital manager budgeted \$100,000 for monthly nursing expenses in the hospital’s well-baby clinic. The manager expected that the clinic would treat 5,000 babies and pay its nurses \$40 per hour. Instead, the clinic treated 6,000 babies and used 3,200 hours of nursing time at \$37.50 an hour. Calculate the total, quantity, price, and volume variances for nursing expenses during the month. Briefly explain your answers.

 TB Total budget 100000 \$ EB Expected babies treated 5000 babies P Hourly rate , Price 40 \$/hour Q Hours expected (Quantity) 2500 Hours (TB/P) AB Actual babies treated 6000 babies P' Actual hourly rate, price 37.5 \$/hour Q' Hours used (Quanity) 3200 Hours TC' Total cost 120000 \$ Total variance (TC'-TB) 20000 \$ Ans Quantity variance Q'-Q 700 hours Ans Price variance (Actual unit cost - Standard unit cost) * Actual Quantity Purchased (P'-P)*Q' -8000 \$ Ans Volume variance (Q'-Q)*P 28000 \$ Ans

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