Bhimani, Horngren, Datar and Rajan,
Management and Cost Accounting, 5
th
Edition, Instructor’s Manual
© Pearson Education Limited 2012 Nurses
=
(0.50 – 0.45) × 17,500 × SFr 22 = 0.05 × 17,500 × SFr 25 = SFr 21,875 U Nursing assistants =
(0.25 – 0.30) x 17,500 × SFr 17 = –0.02 x 17,500 × SFr 17 = 5,950 F Orderlies
=
(0.22 – 0.25) xx SFr 12 = –0.03 xx SFr 12 = 6,300 F Total direct nursing labour mix variance
SFr 9,625 U The total direct nursing labour yield variance can also be calculated as the sum of the direct nursing labour yield variances for each input. Direct nursing labour yield variance for each input = Actual total quantity of all direct nursing labour inputs used – Budgeted total quantity of all direct nursing labour inputs allowed for actual output achieved × Budgeted direct nursing labour input mix percentage × Budgeted price
of direct nursing labour inputNurses
= (17,500 – 18,000) × 0.45 × SFr 25 =
–500 x 0.45 × SFr 25 = SFr 5,625 F Nursing assistants = (17,500 – 18,000) × 0.30 × SFr 17 =
–500 x 0.30 × SFr 17 = 2,550 F Orderlies
= (17,500 – 18,000) × 0.25 × SFr 12 =
–500 x 0.25 × SFr 12 = 1,500 F Total direct nursing labour yield variance
SFr 9,675 F
3 Les Cliniques du Parc shows an unfavourable mix variance because it used a higher percentage of the higher (budgeted) priced nurses in the actual mix relative to the budgeted mix. It shows a favourable yield variance because the total number of actual hours of nursing time was less than the budgeted amount. One possible explanation is that using more experienced and qualified nurses reduced the total time needed for nursing activities – the unfavourable mix variance was more than offset by the favourable yield variance.
Alternatively, of course, management might find that the mix and yield variances are unrelated. In either case, management must evaluate if using fewer nursing hours compromised the quality of care. Poor-quality care could hurt the long-term reputation and prospects of the hospital. Managements goal is to control costs without reducing the quality of care.
Share with your friends: