# PPA 602 * Volume, Risk, and Price Variances * ( 2 pg paper )

Volume, Risk, and Price Variances

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Analyze the variances in the following scenario: 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? Use either the approach from chapter 8 or from Appendix 8-A to solve. Clearly label the calculations of the required variances using Excel. Use formulas to calculate the three variances and format the cells to insert a comma if there is more than three numbers and round to the nearest whole number. Explain the meaning of the variances in a two page Word document

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