Variance
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Variance is the difference between the forecast amount and the actual amount. When the actual amount is lower than the forecast amount, there is a favorable variance. However, when the actual amount is higher than the forecast amount, there is unfavorable balance.. In this case, variance will be the difference between actual expenses and forecast amount. The total forecast expenses in Munroe regional medical center in 2010 were $307,385 and the actual expenses were $310,536. The difference between the actual expenses and forecasted expenses was $3,152.
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Expense1
Salaries
The forecasted salary expenses were $105,469 and the actual salary expenses were $101,543. The variance was $101,543-$101=105,469= 3926. The salaries cost in the hospital decreased by 3926 as shown by the positive variance. The salary expenses reduced as the organization did not overspend on salaries as the number of employees was lower than they had planned. The managers were responsible as they stayed within the budget (Cleverly, Song & Cleverly, 2011).
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Expense 2
Employee benefits
The organization forecasted the employee benefits to be $23,613 in 2010. The actual employee benefits in the organization were $22,513. The variance was &22,513-&23,613=$1,100. The employee benefits reduced by $1,100 and hence the company did not overspent. Though the organization provided employee benefits to its employees, managers ensured the benefits offered to employees did not exceed the planned amount and hence work hard to stay within the budget. The employee benefits could have reduced because the organization did not provide benefits to all the workers as some of the workers were not entitled to employee benefits (Cleverly, Song & Cleverly, 2011).
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Expense 3
Supplies
The hospital forecasted supply expenses in 2010 to be $72,094, but the expenses were $71,901