The following information has been prepared for a home health agency.

Home Health Agency

Budget and Expense

Budgeted costs at actual volume would be $25,344 ($21.12 × 1,200), and the total variance to be explained is $2,536 Unfavorable ($27,880 – $25,344). Calculate the variance in the following questions and be sure to specify whether the variance is favorable or unfavorable.

2.1. What is the amount of variance that is attributed to the difference between the budgeted and actual wage rate per hour?
2.2. What is the amount of variance that is attributed to the change in labor productivity?
2.3. What is the amount of variance that can be attributed to the difference between budgeted and actual volume?

Transcribed Image Text:

Budget Actual Wage Rate per Hour $16.00 $17.00 Fixed Hours 320 320 Variable Hours per Relative Value Unit (RVU) Value Unit (RVU) 1.0 1.1 Relative Value Units (RVUS) 1,000 1,200 Total Labor Hours 1,320 1,640 Labor Costs $21,120 $27,880 Cost per RVU $21.12 $23.23 Budget Actual Wage Rate per Hour $16.00 $17.00 Fixed Hours 320 320 Variable Hours per Relative Value Unit (RVU) Value Unit (RVU) 1.0 1.1 Relative Value Units (RVUS) 1,000 1,200 Total Labor Hours 1,320 1,640 Labor Costs $21,120 $27,880 Cost per RVU $21.12 $23.23

Answer rating: 100% (QA)

Answer1 Calculation of variance that is attributed to the dif... View the full answer