## Volume, the budgeted expectation (Finkler, 2013). The Medical group

Volume,
Risk, and Price Variance

Adequate accounting principles allow for accountability,
adequate projections, and budget analysis. The special budget for the flu
season was \$40,0000.  The budget
projected that 1,000 hours for additional hired part time help will fill the
need for the upcoming season.  The budget
projected that 400 flu shot would be administered while 1,600 patients would be
treated.  The cost per shot was expected
to be \$50 while the price for treating patients were \$80 per patient.  The expected total revenue would be \$148,000.
The estimated profit would be \$108,000. This was calculated by subtracting the
total budget from the expected revenue. When analyzing this information, one must
make sure that they leave room for possible fluctuations that may impact the
anticipated numbers.  Due to these
variances, are calculated to adequately prepare for the next year (Finkler,
2013).

We Will Write a Custom Essay Specifically
For You For Only \$13.90/page!

order now

In turn, the medical group accounted for 1,200 patients
who received the flu shot and 1,400 who received the treatment. The medical
group was able to collect \$55 for each shot given and \$70 per flu patient. This
was \$5 more per flue shot and \$10 less per patient treated.  Although the cost per patient was less, the
increase in the amount of people receiving the flu shot countered the sale
price.  Finkler defined volume variance
as when the output level Is different than the budgeted expectation (Finkler,
2013). The Medical group
generated \$164,000. The volume variance equation is the AC-BQ X BP. The
original budget was \$106, 400 dollars while the flex budget is \$101,600
dollars. The volume variance for this budget was a \$4,800. The flu shots actually
volume rendered 1200 at a 20% budget mix.
With the budgeted price being \$50 the total came to \$12,000.  The actual volume of flu patients was 1400
with a budget mix at 80%. With a \$80 budgeted price this rendered a \$89,600
flex budget total combining them for \$101,600.

Performance audits are key tool in accounting
measures and practices. They check for the areas of waste and effectiveness.
This allows for organization to see if they are meeting their company goals and
standards (Finkler, 2013). Flu shots actual volume was 1200 with a 46% actual
mix at a \$50 budgeted price. This rendered \$27,692. Flu patients actual volume
being 1400 with a 54\$ actual mix at a \$80 budgeted cost rendered \$60, 308. The
total performance audit was \$88,00. The mixed variance for the flex budget
totaled \$101,600 and the performance audit is \$88,000 giving the mix variance
of \$13,600. The actual profit rendered was \$124,000.  The price variance equals (AP – SP) X AQ. The
price variance is for flu shot cost is (\$55-\$50) x (1200) = 6,000. The price
variance for patients treated is (\$70-80) x (1400) = \$-14,000.

The actual flu shot revenue accumulated an actual volume
of 1200 with at 46% actual mix with a \$55 actual price rendering \$30,462.  Flu patients’ actual volume of 1400 with a
46% actual mix with a \$70 equal \$52,769. The Actual revenue with the actual mix
included is \$83,231. With the performance audit at \$88,000 and the actual revenue
being \$83,231, the price variance equated to \$4,769.

By accurately accounting the
difference between the budgeted and actual total rendered, it leaves an
accounting trail for organizations to properly track revenue and resources.
This prevents waste, embezzlement and misappropriation of funds. This is key in
the private and public sector. In the public sect, it allows for officials to
track government spending and usage. When tax payers can see clear accounting
measures, they are able to hold elected and non-elected officials accountable
for roles in the accounting practice of government funds.  In the private sector, they can tack
profitability, shareholder costs, and company viability. When clear accounting
measure are present, shareholders can assess the risk in conducting