...Variance Reporting As a manager for a variable department within a hospital, it sounds like I will certainly endure many challenges as it relates to budgeting. But mostly, because I'm faced with the challenge of not having a fixed budget for the department I'm managing. For this purpose I will be the manager of this department with a flexible budget or a variable budget. First we would need to understand what a a variable budget is. Most variable departments run based on luck, because the budget isn't a standard fixed budget its a chance taken each month that expenses will cover each other based on what portions of the budget or under and/or over budget. This sometimes how a variable department operates. We will also examine a variance report. In terms of the budget, a variable budget means that there is no determined dollar amount to allot for certain items in the budget. It is the examination of the deviation of an actual observation from the standard. Of course, in this scenario I don't have to opportunity to have a budget that remains constant, instead I am faced with a flexible budget as it relates to payroll. If I were to receive my monthly budget report and it has imbalanced findings because it is off budget, it would be bit concerning for me. The goal of a financial manager is to provide accurate budgets based on their reporting. Part of my duties include the financial success of the department. Presenting anything that falls short of the projections made by my...
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...CASE STUDY The management team of Thorpe feel that standard costing and variance analysis have little to offer in the reporting of some of the activities of their firm. “Although we produce a range of fairly standardized products” sates the accountant of Thorpe, “prices of many of our raw materials are apt to change suddenly and comparison of actual prices with a pre-determined, and often unrealistic, standard price is of little use. For some of our products we can utilize one of several equally suitable raw materials and we always plan to utilize the raw material which will, in our opinion, lead to the cheapest total production cost. However we are frequently caught out by price changes and the material actually used often proves, after the event, to have been more expensive than the alternative which was originally rejected. “For example, consider the experience over the last accounting period of two of our products, Alpha and Beta. To produce a unit of Alpha we can use either 5 kg of gamma or 5 kg of delta. We planned to use gamma as it appeared it would be the cheaper of the two and ours plans were based on a cost of gamma of $ 3 per kg. due to market movements the actual prices changed and if we had purchased efficiently the cost would have been gamma $ 4.50 per kg delta $4.00 per kg “Production of alpha was 2 000 units and usage of gamma amounted to 10 8000 kg at a total cost of $51 840. “Product of Beta uses only one raw material...
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...Variance Analysis A manager of a variable hospital department has many responsibilities. The manager is accountable for budgeting and to protect profits. The financial manager is responsible for guarding overspending and generating profits. They are active in the budgeting process throughout the fiscal year. The budget department manager communicates with other managers, and accounting departments concerning budget issues, financing, and concerns in the organizations departments. Sometimes situations occur whereas payroll salaries are high and supplies are lower than planned and budgeted. The budget manager is responsible for providing feedback about finances, revenue, and any potential variances in the budgeted costs. This essay will be based on a scenario of salaries that were higher and supplies lower than initially budgeted. This paper will explore variances in the scenario mentioned earlier, and explain the relationship between variance reporting, interpreting variance reporting results, and the results of performance within a health care organization. The hospital variable department has experience a case in which employee salaries are higher than budgeted, while the supplies are lower than initially budgeted. This is the result of an epidemic of asthma patients who were admitted to the hospital over the last three months. The hospital approved overtime to assist in the growing number of patients and to accommodate their needs. In the process of caring for patients more...
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...Sharrain Walls Variance Analysis Grand Canyon University: HCA-530 July 5, 2016 Introduction Various reports help with viewing and keeping track of the productivity of a department. Managers find these reports very helpful with assisting to find an issue, trend, overspending, and underspending. A report commonly used is a variance report, which compares the planned amount to the actual amount. This report is critical in determining major decisions and viewing fluctuations. The report can be in the form of a table or graph and can be considered favorable or unfavorable based on the results. Vice Presidents look for the report to be clear and direct. Managers should include all factors associated with the variance report as well as the relationships between variance reporting, interpreting variance report results, and actual reports. Variance Analysis When viewing the results of the report consider the hospital size and utilization of the services offered by the hospital. When performing a variance analysis, relationships can be identified. Favorable (positive) and unfavorable (negative) correlations are critical in business planning. An example would be, variance analysis may show that when sales for product a rise in sales for product B. This type of relationship may be used for success of other products (Cross, N.d.). When using a variance report for forecasting variance data allows managers to identify factors such as seasonal changes for the favorable and unfavorable...
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...Variance Analysis HCA-240 Variance Analysis The many reasons as to why the budget for this month has gone over have many factors involved. For a $5,000 favorable variance on staffing, the department head can state that the company was able to obtain a 25 % discount from a new supplier, which resulted in a savings for the department. Another example would be when you have a $25,000 unfavorable variance in sick time for many employees, the department head would state there was an outbreak earlier in the season and this was not expected, resulting in hourly and sick time expenses that were not anticipated. What we can do, would be to analyze variances by the month, quarter or year. Having budget variances in place can allow at least two sources the things that can be controlled and things that cannot. This time I know that the reason the salaries were higher, we because of the recent storm we had and it cause some staff not to show up for work and other to do overtime. Going forward what we can implement would be an emergency team for weather related issues or natural disaster to ensure that we don’t go over our budget and if we see that we are approaching that then we can implement another plan or process, to help balance it back out like giving comp time or early leave. When uncontrollable factors occur many are often external which then result from occurrences outside of the company such as a natural disasters, which can then throw the budget into a downward...
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...Variance Analysis Blake Richardson Grand Canyon University HCA-240 March 16, 2013 Variance Analysis To really understand this paper, one should understand what variance analysis does for the entity. Variance analysis is the process of examining every variance between what is actual and budgeted or expected and standard cost to develop reasons as to why the budgeted results were not met. In hospitals, there are many different factors that a financial manager should consider before submitting a variance report to the vice president of the entity. These factors can include staff receiving too much overtime, hired too many staff members for the increase in patients, and maybe even one of the staff members forgot to scan in all of the equipment. Once the problem is recognized and determined it is sent up the chain of command, where the variance reports are interpreted and the expected results are given. In this setting, there could be quite a few factors that had potentially created higher salaries and lower supplies. To determine this we need to look at the changes in input prices, productivity and the changes in departmental volume. (Cleverley, Song, & Cleverley, 2011, p. 386) For a manager to be able to determine this they should first recognize the problem, determine the cause, and then correct the problem. Looking at the efficiency cost, we can determine how long it has been going on for, the loss per time unit, and if the problem is correctable. Once the...
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...operations of the finance department • Prepare the monthly financial reports with all needed financial and costing analysis comparing with Budget and KPIs. • Manage the preparation of the official annual report of actual revenues, transfers, and expenses. • Manage the preparation of financial outlooks and financial forecasts in coordination with the CFO. • Ensure that the company are continuously keeping sufficient fund to fulfill its financial obligation by preparing monthly cash flow forecast. Monitor the actual cash flow against forecast and take the necessary measure to remedy variances. • Direct and coordinate debt financing and debt service payments with external agencies and monitor terms, conditions and covenants and ensure compliance with the same. • Prepare financial analysis for contract negotiations and product investment decisions. • Ensure compliance with local, state, and federal budgetary reporting requirements. • Lead and coordinate with all other department the preparation of annual operating budget and developing 3-10 years business plans for the company. • Recommend benchmarks for measuring the financial and operating performance of divisions and departments. • Establish and implement short- and long-range departmental goals, objectives, policies, and operating procedures. • Design, establish, and maintain an organizational structure and staffing to effectively accomplish the department's goals and objectives. • Serve as primary legislative liaison for company...
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...= 6.34. Can we conclude that the average hours for all US residents (μ) is 6.34? Can we conclude that μ > 6? Fortunately, we can use probability theory to understand how the process of taking a random sample will blur the information in a population. But first, we need to understand why and how the information is blurred. Sampling Variability Although the average social networking hours for all US residents is a fixed number, the average of a sample of 100 residents depends on precisely which sample is taken. In other words, the sample mean is subject to “sampling variability”. The problem is that by reporting x alone, we don’t take account of the variability caused by the sampling procedure. If we had polled different residents, we might have gotten a different average social networking hours. In general, the characteristics of the observed distribution (mean, median, variance, range, IQR, etc.), change from sample to sample, and may never exactly match the population quantities. To visualize properties of sampling distributions, we will use the sampling lab, and the very nice website at: http://onlinestatbook.com/stat_sim/sampling_dist/index.html Statistical Inference: A body of...
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...Within A Budget Submitted by: Nico Antonio A. Serafin Submitted to: Ma’am Lorejen Salise Based on the variance/diversion report of the TAFE Island Holiday Resort, me and my business partner have interpreted the figures listed in the report and have offered remedies to improve their budget performance. This is their income report: Income Actual Budget Variance TAFE Restaurant $233,278 $205,000 $ 28,278 TAFE Bar $ 36,500 $ 51,300 $ (14,800) Island Coffee Shop $ 14,000 $ 18,500 $ (4,500) Room Service $ 1,840 $ 4,450 $ (2,610) Total Income $285,618 $279,250 $ 6,368 Based on this report, we can tell that a certain area of the resort has exceeded the budget therefore having a variance of $28,278. Because of this the resort should be more considerable with their budgeting judgment. They should plan, organize their budget and even motivate their staff in making decisions well. They can also start making another budget plan in this section of the resort. They can use a zero budget system to clearly detect inflated budgets in the beginning of the financial year. The resort should control their budget by checking income and expenditure at regular intervals and identifying and reporting the deviations. As for the other sections of their resort, there is no need for any change. It is because the incomes and the variances did not exceed their targeted budget. Therefore, they can save more if they continue. They only need to...
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...uniforms to prevent hiding cash • Extensive supervision of gamers, dealers and all personnel handling cash • Cash cage, lock boxes and specific procedures for handling cash • Being aggressive on collection of receivables • A lot of redundancy so they are never short staffed and security remains high Some of the personnel controls that we see are: • Only hire experienced staff • Thorough screening process of potential hires • Extensive training of employees • Licensing of casino staff • Good job design: giving staff 20 minutes break each hour Cultural controls: • Reporting suspicious transactions • Reporting any transaction over $10 000 Results controls: • Upper management bonuses for good performance, • Bonus vacation day for perfect semi annual attendance • Annual gala held to recognize employee performance • Staff held personally accountable for cash variances • Variance reports and investigations in case of shortage Overall the Bellagio has some very good and strict controls in place to keep track of their cash, however there are some areas for improvement....
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...S T R A T E G I C M A N A G E M E N T - Samenvattingen papers - | Naam | | 1 | Leading Change: Why Transformation Efforts Fail | x | 2 | Conceptual models and the Cuban Missile Crisis | | 2 | The Hidden Traps of Decision making | x | 3 | Control in the age of empowerment | x | 3 | The Real Budget Crisis: Stop Rewarding Forecasting and Negotiating Instead of Real Performance | x | 3 | Note on flexible budgeting and variance analysis | x | 3 | Borealis Case | | 4 | Note on Organization Structure | | 4 | Note on Organization Culture | | 4 | Designing Organizations for Performance: The Alignment of Design and Strategy | | 5. | On the folly of rewarding A, While hoping for B | | 5 | Incentives within Organizations | | 5 | Strategy to implementation: Seeking alignment | | 5 | Measuring performance | | 7 | GE’s growth strategy: The Immelt inititative | | Week 3 Control in Age of Empowerment Creativity and control don’t have to conflict Failure to control employees appropriately Managers can encourage innovation among employees while ensuring adequate control by using four powerful management systems or levers. 1- Diagnostic control systems Traditional monitors of critical performance outcomes such as costs and revenues 2- Belief systems Encompass the company’s values, mission and other statements of philosophy 3- Boundary systems Based on power of negative thinking Tell your employees what not to do 4- Interactive control...
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...JET2 Task 2 A1. Concerns There are many concerns with the budget planning for Competition Bike. From year 2006 to 2008, Competition Bike experienced a 13.3% increase in sales. In year 9, sales are projected to increase to 3510 units to give sales revenue of $5,247,450. This is a bold increase after 3400 units sold in 2008 and 4000 sold in 2007. I do not think the sales will be as robust with the economy rebounding. Sales projections should be 3425 with net sales at $5,120,375. Since the Competition Bike Company projected overly optimistic sales, there are several areas in the budget that will be affected. The areas affected are Sales Commission, Transportation Out, Advertising, Research and Development, Raw Materials, and Labor. * Sales Commission: With commissions budgeted for 3% of sales revenue, this amount is budgeted too high since the budgeted net sales is inflated * Advertising: This expense line will be incorrect due to it being based on 2% of the Gross Margin. The Gross Margin will be off due to inflated projections. * Raw Materials: Due to inflated sales projections, the raw materials cost should be lowered to reflect a realistic net sales projection. * Labor: Labor cost should be reduced due to fewer hours being used with my projection of fewer units being sold as compared to the 2009 projections. It takes 15 hours/unit, so with fewer than projected sales, this should be reduced. * Transportation Out: Since the projected sales...
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...Total Plan Risk: Integrating Assets into a Consistent Risk Framework Dan diBartolomeo Northfield Information Services, Inc. FactSet PMW Conference, Atlanta , November 2002 Do We Want to Measure Risk or Manage It? § Measuring risk is an exercise in forecasting § Managing risk requires decision making § Managing risk well requires rational decision making based on an understanding of utility theory What Risks are of Concern to Us? § Asset/liability mismatch risks § Asset class volatility § Style and active management risks How about Multiple Portfolios? § The firm-wide (plan-wide) risk problem w Multiple portfolios with multiple benchmarks w Across countries, across asset classes w Mixture of liquid, and illiquid assets, derivatives w Need to integrate liabilities Approach Number #1 § Build factor risk model for each portfolio separately and aggregate the risks § Arises from the existing stock of models § Advantage is that you are probably using the same models at the portfolio level so you have internal consistency § Problems w Not intuitive, as you can’t add exposures w Lots of factors may lead to covariance matrix which is not positive definite w Use high frequency data or an EM algorithm w Inclusion of liabilities or illiquid assets Approach #2 § Proxy each asset class with indices and then use full covariance. Adapted from trading desk systems § Advantage is simplicity. Works well for asset classes where instruments within the class are homogeneous...
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...from one part of the procedure is compared to thoughts and expectations from another part. 3. An analytical procedure during the planning stage includes comparing revenue ratios for Burlington with those of previous years, industry standards, or competitors to find any possible issues relating to overstatement of revenue. This can also help determine whether or not the revenue results are reasonable. 4. Estimated Revenue: $2,531,334 SEE BELOW 5. When comparing the difference in revenue from the reported value and the expected value, revenue was underestimated by $298,113. Many factors can effect revenue figures. Although the reported revenue was higher than expected, suspicion still arises. Many companies have motive for reporting revenue too high. However, this could be a natural difference caused by the affect of a change in the...
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...heteroskedasticity, the implied volatility smile, and the variance risk premium Louis H. Ederington a,⇑, Wei Guan b a b Finance Division, Michael F. Price College of Business, University of Oklahoma, 205A Adams Hall, Norman, OK 73019, USA College of Business, University of South Florida St. Petersburg, 140 Seventh Avenue South, St. Petersburg, FL 33701, USA a r t i c l e i n f o a b s t r a c t This paper estimates how the shape of the implied volatility smile and the size of the variance risk premium relate to parameters of GARCH-type time-series models measuring how conditional volatility responds to return shocks. Markets in which return shocks lead to large increases in conditional volatility tend to have larger variance risk premia than markets in which the impact on conditional volatility is slight. Markets in which negative (positive) return shocks lead to larger increases in future volatility than positive (negative) return shocks tend to have downward (upward) sloping implied volatility smiles. Also, differences in how volatility responds to return shocks as measured by GARCH-type models explain much, but not all, of the variations in excess kurtosis and multi-period skewness across different markets. Ó 2013 Elsevier B.V. All rights reserved. Article history: Received 11 October 2012 Accepted 14 April 2013 Available online 17 May 2013 JEL classification: G13 G10 G12 Keywords: Implied volatility Volatility smile Variance risk premium GARCH Conditional heteroskedasticity ...
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