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Special Project Budget

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Submitted By JHH11
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You are the nursing administrator for a medical group that expects a severe outbreak of the flu this winter. You hire additional staff to treat the patients and administer shots. Your special project budget was for 1,000 hours of part-time nurses’ services at $40 per hour, for a total cost of $40,000. It was expected that these nurses would administer 400 flu shots and treat 1,600 flu patients. The medical group typically charges $50 for a flu shot and $80 for treating a flu patient. Actually, the group had 1,200 patients who received the flu shot and 1,400 who had the flu and received treatment. On average, it was able to collect $55 per flu shot and $70 per flu patient. Compute the volume, mix, and price revenue variances. How did things turn out for the group considering just revenues? How did they turn out from a profit perspective?

Total Revenue for Actual Scenario:
(Number of flu shots x charge per flu shot) + (Number of flu patients x charge per patient)
=(1200 x 55) + (1400 x 70) = 66,000 + 98,000 = 164,000 Projected Revenue:
(Estimated number of flu shots that will be given x estimated charge per flu shot) + (estimated number of flu patients x estimated charge per patient)
=(400 x 50) + (1600 x 80) = 20,000 + 128,000 = 148,000 Cost due to additional staff:
(number of hours x pay per hour)
= (1000 x 40) = $40,000 (also given by problem) Total Profit:
(Actual Revenue - Cost) = $164,000 - $40,000 = $124,000 From the perspective of revenue, the group made nearly 10% more than was originally estimated with a total profit of $124,000.
Analyze the following scenario: Jump Hospital currently allocates all maintenance department costs based on departmental square feet. However, the manager of the pharmacy department has suggested that an ABC approach be used for the portion of the maintenance department costs that relate to repairing…...

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