Orginal Budget Budgeted Volume Budgeted Quantity Budgeted Price

1,000 40.00 $40,000.00 F
Flexible Budget Actual Value Budgeted Quantity Budgeted Price
1,200 41.67 $50,000.00 UF


Orginal Budget/Flexible Budget Budgeted Volume Budgeted Quantity Budgeted Price
1,000 $40.00 $40,000
Actual Value Budgeted Quantity Budgeted Price
1,200 $41.67 $50,004 UF



Problem:Project Budget was for 1,000 hours of part-time nurses services at $40.00 per hour, for
a total cost of $40,000. It was expected that these nurses' woruld treat 2,000 patients. After
the flu season was over, it turned out that the total spent on part-time nurses' was $50,000.
The nurses' worked 1,200 hours and 2,600 patients were treated. Calculate the varriances.
Was the overall result favorable or unfavorable?

Favorable

To calculate the variances, we need to compare the actual values with the budgeted values for both the quantity and the price.

First, let's calculate the quantity variance.

1. Calculate the budgeted quantity: 1,000 hours.
2. Calculate the actual quantity: 1,200 hours.
3. Calculate the variance: Actual Quantity - Budgeted Quantity.
Variance = 1,200 - 1,000 = 200.

The quantity variance is 200 hours.

Next, let's calculate the price variance.

1. Calculate the budgeted price per hour: $40.00.
2. Calculate the actual price per hour: Total spent / Actual quantity.
Actual Price = $50,000 / 1,200 = $41.67.
3. Calculate the variance: Actual Price - Budgeted Price.
Variance = $41.67 - $40.00 = $1.67.

The price variance is $1.67 per hour.

Lastly, let's determine if the overall result is favorable or unfavorable.

To do this, we compare the actual cost (total spent) with the budgeted cost.

1. Calculate the budgeted cost: Budgeted Quantity * Budgeted Price.
Budgeted Cost = 1,000 * $40.00 = $40,000.
2. Compare the actual cost with the budgeted cost.
If the actual cost is greater than the budgeted cost, it is unfavorable.
If the actual cost is less than the budgeted cost, it is favorable.
In this case, the actual cost is $50,000, which is greater than the budgeted cost of $40,000.

Therefore, the overall result is unfavorable.

In summary, the variances for the project are:
Quantity Variance: 200 hours
Price Variance: $1.67 per hour

The overall result is unfavorable.