A hospital’s accounting team routinely computes expense variances using a “three

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A hospital’s accounting team routinely computes expense variances using a “three way” model using “price”, “efficiency”, and “volume” variances when comparing actual expenses each month to a fixed budget. In February total costs for the supplies to perform its lab tests were $50,000 compared to a fixed budget of $60,000. In the “three way analysis” the “price” variance was computed to be an unfavorable $5,000 (U); the “efficiency” variance was computed to be a favorable $6,000 (F). Given this information, what was the “volume” variance and be sure to note whether it was favorable (F) or unfavorable (U). A hospital’s accounting team routinely computes expense variances using a “three way” model using “price”, “efficiency”, and “volume” variances when comparing actual expenses each month to a fixed budget. In February total costs for the supplies to perform its lab tests were $50,000 compared to a fixed budget of $60,000. In the “three way analysis” the “price” variance was computed to be an unfavorable $5,000 (U); the “efficiency” variance was computed to be a favorable $6,000 (F). Given this information, what was the “volume” variance and be sure to note whether it was favorable (F) or unfavorable (U). A hospital’s accounting team routinely computes expense variances using a “three way” model using “price”, “efficiency”, and “volume” variances when comparing actual expenses each month to a fixed budget. In February total costs for the supplies to perform its lab tests were $50,000 compared to a fixed budget of $60,000. In the “three way analysis” the “price” variance was computed to be an unfavorable $5,000 (U); the “efficiency” variance was computed to be a favorable $6,000 (F). Given this information, what was the “volume” variance and be sure to note whether it was favorable (F) or unfavorable (U).

Explanation / Answer

In February total costs for the supplies to perform its lab tests were $50,000 compared to a fixed budget of $60,000.This means it was unfavourable by $10000

n the “three way analysis” the “price” variance was computed to be an unfavorable $5,000 (U); the “efficiency” variance was computed to be a favorable $6,000 (F).

Total Overhead Variance= Efficiency Variance+ Price Variance+ Volume Variance

-10000= 6000F -5000U+6000F+x

X=$11000 Unfavourable

-10000= 6000F -5000U+6000F+x

X=$11000 Unfavourable

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A hospital’s accounting team routinely computes expense variances using a “three

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A hospital’s accounting team routinely computes expense variances using a “three

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