Capital Project
Budget Management Analysis
Esfira Shakhmurova
NUR 571
December 3, 2012
David Karluk
Variance Analysis as defined by Finkler et al., (2007), is “the aspect of budgeting in which actual results are compared with budgeted expectations”(p.310). In variance analysis, if the actual amount is lower than that of the forecast amount than there is a positive variance. However, if the actual amount is higher than that of the forecast amount then the variance budget is showing negative results. The total forecast expenses for Hypothetical Memorial Hospital in 2008 were $443,931 and the actual expenses were $468,558. The difference between the two was ($24,627). The current period forecasted budget was $37,211 and the actual expenses were $42,971. The difference between the two is ($5,760). This results in a negative variance.
Expense I: Salaries The forecasted salary expenses for 2008 were $139,317 and the actual expenses were $143,052. The variance was ($3,735). In 2007, the actual salary expense was $124,925. There was an increase in 2008, but the actual expense was greater than the budgeted amount bringing in a negative variance. The current period salary expenses were budgeted for $11,963 and the actual current period expense is $13,475. The managers were not acting responsibly in figuring out a way to decrease the actual salaries after the first or second month to make sure they stay within the expected budget.
Expense II: Employee Benefits
The organization forecasted the employee benefits to be $36,464 in 2008. The actual employee benefits in the organization were $34,724. The variance was $1,740. The current periods benefits were budgeted to be more than actually spent resulting in a positive variance. The organizations employees were provided benefits and made sure they stayed within budget, which Hypothetical Memorial Hospital has successfully maintained.
Expense III:
Esfira Shakhmurova
NUR 571
December 3, 2012
David Karluk
Variance Analysis as defined by Finkler et al., (2007), is “the aspect of budgeting in which actual results are compared with budgeted expectations”(p.310). In variance analysis, if the actual amount is lower than that of the forecast amount than there is a positive variance. However, if the actual amount is higher than that of the forecast amount then the variance budget is showing negative results. The total forecast expenses for Hypothetical Memorial Hospital in 2008 were $443,931 and the actual expenses were $468,558. The difference between the two was ($24,627). The current period forecasted budget was $37,211 and the actual expenses were $42,971. The difference between the two is ($5,760). This results in a negative variance.
Expense I: Salaries The forecasted salary expenses for 2008 were $139,317 and the actual expenses were $143,052. The variance was ($3,735). In 2007, the actual salary expense was $124,925. There was an increase in 2008, but the actual expense was greater than the budgeted amount bringing in a negative variance. The current period salary expenses were budgeted for $11,963 and the actual current period expense is $13,475. The managers were not acting responsibly in figuring out a way to decrease the actual salaries after the first or second month to make sure they stay within the expected budget.
Expense II: Employee Benefits
The organization forecasted the employee benefits to be $36,464 in 2008. The actual employee benefits in the organization were $34,724. The variance was $1,740. The current periods benefits were budgeted to be more than actually spent resulting in a positive variance. The organizations employees were provided benefits and made sure they stayed within budget, which Hypothetical Memorial Hospital has successfully maintained.
Expense III: