You have been asked by management to explain the variances in costs under your inpatient capitates contract. The following data is provided.

Requirements:

1: What dollar amount of the total variance is attributed to Enrollment Variance?

2: What dollar effect did the increased admission rate have on cost?

3: The intensity of care delivered dropped from a budgeted case mix of 0.90 to an actual case mix of 0.85. What dollar effect did this have on actual costs?

Budgeted

Actual

Volume

200,000

190,000

Revenue per unit

$40

$37

Revenue

$8,000,000

$7,030,000

a) $400,000

b) $570,000

c) $970,000

d) $600,000

e) Cannot calculate with given information

6: Using the information in the table below, determine how much of the supplies variance is due to a change in volume. Then select the letter from the list below that shows the correct answer.

Budgeted

Actual

Variance

Volume

1,000

1,100

100

Supplies

$10,000

$12,750

$2,750

Fixed labor

$20,000

$22,250

$2,250

$5,000

a) $ 900

b) $1,000

c) $1,050

d) $1,250

e) $1,500

Transcribed Image Text:

Budget Actual Inpatient Costs Members Admission Rate Case Mix Index Cost per Case (CMI = 1.0) $12,568,500 42,000 0.070 0.90 $4,750 $16,618,350 42,000 0.095 0.85 $4,900 Budget Actual Inpatient Costs Members Admission Rate Case Mix Index Cost per Case (CMI = 1.0) $12,568,500 42,000 0.070 0.90 $4,750 $16,618,350 42,000 0.095 0.85 $4,900

Answer rating: 100% (QA)

1 Total variance Actual costs incurred 16618350 Budget costs 12568500 Total variance 4049850 Admiss... View the full answer