Variance Analysis 
Variance Analysis
HCA-530
Sue P. Gombio
Grand Canyon University
Variance Analysis is utilized to support the management during the initial stages. It is the procedure of investigating each variance between the actual and budgeted costs to determine the reasons as to why the planned amount was not met, in more detailed explanation (Ventureline, 2012). There are several influences that contribute to the variance report and one is the department’s assumptions, second is the possible risk for this assumption, and third is the actual expense used for the budget. Let’s say the CEO or Director announces the monthly budget that the department needs to meet. Once the department receives the monthly budget outcomes, the budget for supplies was not properly utilized; therefore the salary is higher than the premeditated budget.
Once a monthly budget is received for a given month, the managers have to plan on how to use the given budget wisely. It’s true that the employees need some office materials or equipment to get the job done and there are certain areas where the budget needs to be dispensed accordingly. An example to this is the healthcare industry, specifically within the supplies department where the demand for medical supplies is high and needs to be available whenever needed. For the department to run efficiently they need a reliable technology that could help them streamline their process like computers, handheld scanners for inventory, and supply carts, and these are supposed to be available even before opening the department or even before the hospital started business. The carts have a long lifespan and could last for years; therefore sometimes planning for the budget to be used for supplies per month does not need to be met since the supplies needed by the staff are already supplied. Under budgeting for this specific department is safe because it can help the department save some money in case a supply cart breaks and the part is
HCA-530
Sue P. Gombio
Grand Canyon University
Variance Analysis is utilized to support the management during the initial stages. It is the procedure of investigating each variance between the actual and budgeted costs to determine the reasons as to why the planned amount was not met, in more detailed explanation (Ventureline, 2012). There are several influences that contribute to the variance report and one is the department’s assumptions, second is the possible risk for this assumption, and third is the actual expense used for the budget. Let’s say the CEO or Director announces the monthly budget that the department needs to meet. Once the department receives the monthly budget outcomes, the budget for supplies was not properly utilized; therefore the salary is higher than the premeditated budget.
Once a monthly budget is received for a given month, the managers have to plan on how to use the given budget wisely. It’s true that the employees need some office materials or equipment to get the job done and there are certain areas where the budget needs to be dispensed accordingly. An example to this is the healthcare industry, specifically within the supplies department where the demand for medical supplies is high and needs to be available whenever needed. For the department to run efficiently they need a reliable technology that could help them streamline their process like computers, handheld scanners for inventory, and supply carts, and these are supposed to be available even before opening the department or even before the hospital started business. The carts have a long lifespan and could last for years; therefore sometimes planning for the budget to be used for supplies per month does not need to be met since the supplies needed by the staff are already supplied. Under budgeting for this specific department is safe because it can help the department save some money in case a supply cart breaks and the part is
References: Heisinger, K., & Hoyle, J.B. (2012). How do managers evaluate performance using cost variance analysis? Straus, G. (2014). 2015 pay raises expected to be 3% next year. USA Today. Retrieved from