Question 1

A price variance examines the difference between

Accepted Answer

A)  The budgeted and actual per unit cost of inputs 
B)  The budgeted and actual number of inputs used to complete an activity 
C)  The budgeted and actual number of activities used to produce an output 
D)  The budgeted and actual number of outputs produced 
A)  The budgeted and actual per unit cost of inputs 
B)  The budgeted and actual number of inputs used to complete an activity 
C)  The budgeted and actual number of activities used to produce an output 
D)  The budgeted and actual number of outputs produced A

Question 2

To avoid going over budget, managers postpone discretionary until the end of the year.

Accepted Answer

A) True 
 B)False  True

Question 3

Performance improvement requires that only unfavorable variances be examined.

Accepted Answer

A) True 
 B)False  False

Question 4

A cost variance includes the impact of all the following factors EXCEPT

Accepted Answer

A)  Changes in price of inputs 
B)  Changes in productivity 
C)  Changes in amount of activities needed to produce an output due to changes in the type of output produced 
D)  Change in the quantity of output produced 
A)  Changes in price of inputs 
B)  Changes in productivity 
C)  Changes in amount of activities needed to produce an output due to changes in the type of output produced 
D)  Change in the quantity of output produced

Question 5

The total variance must always equal the sum of the price, efficiency, intensity, and volume variances.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following would create an unfavorable price variance beyond the control of the manager?

Accepted Answer

A)  An increase in demand and/or reduction in supply of an input 
B)  Unnecessary use of overtime 
C)  An increase in the number of activities, i.e., test or procedures ordered 
D)  An increase in the number of activities, i.e., tests and procedures that must be redone due to errors 
A)  An increase in demand and/or reduction in supply of an input 
B)  Unnecessary use of overtime 
C)  An increase in the number of activities, i.e., test or procedures ordered 
D)  An increase in the number of activities, i.e., tests and procedures that must be redone due to errors

Question 7

An increase in the time necessary to complete an activity,E.g., take a history and physical, would be identified by a larger

Accepted Answer

A)  Price variance 
B)  Efficiency variance 
C)  Intensity variance 
D)  Volume variance 
A)  Price variance 
B)  Efficiency variance 
C)  Intensity variance 
D)  Volume variance

Question 8

Over-production would create an unfavorable and non-controllable volume variance.

Accepted Answer

A) True 
 B)False

Question 9

The variance that examines the difference between the budgeted and actual number of outputs produced is

Accepted Answer

A)  Cost variance 
B)  Volume variance 
C)  Price variance 
D)  Efficiency variance 
E)  Intensity variance 
A)  Cost variance 
B)  Volume variance 
C)  Price variance 
D)  Efficiency variance 
E)  Intensity variance

Question 10

Managers should be credited or praised when

Accepted Answer

A)  Budget variances are favorable and the factors driving the variance are controllable 
B)  Budget variances are unfavorable and the factors driving the variance are controllable 
C)  Budget variances are favorable and the factors driving the variance are uncontrollable 
D)  Budget variances are unfavorable and the factors driving the variance are uncontrollable 
A)  Budget variances are favorable and the factors driving the variance are controllable 
B)  Budget variances are unfavorable and the factors driving the variance are controllable 
C)  Budget variances are favorable and the factors driving the variance are uncontrollable 
D)  Budget variances are unfavorable and the factors driving the variance are uncontrollable

Question 11

The formula for the volume variance is

Accepted Answer

A)  (Actual output-Budgeted output)*Budgeted cost/output 
B)  ((Actual cost/Actual input)-(Budgeted cost/Budgeted input))*Actual quantity of input used 
C)  (Actual inputs/Actual activity-Budgeted inputs/Budgeted activity)*Budgeted cost/input* Actual activities produced 
D)  (Actual activity/Actual output-Budgeted activity/Budgeted output)*Budgeted cost per activity*Actual output 
A)  (Actual output-Budgeted output)*Budgeted cost/output 
B)  ((Actual cost/Actual input)-(Budgeted cost/Budgeted input))*Actual quantity of input used 
C)  (Actual inputs/Actual activity-Budgeted inputs/Budgeted activity)*Budgeted cost/input* Actual activities produced 
D)  (Actual activity/Actual output-Budgeted activity/Budgeted output)*Budgeted cost per activity*Actual output

Question 12

Which variance is least likely to be in the control of healthcare managers?

Accepted Answer

A)  Price variance 
B)  Efficiency variance 
C)  Intensity variance 
D)  Volume variance 
A)  Price variance 
B)  Efficiency variance 
C)  Intensity variance 
D)  Volume variance

Question 13

The two questions variance analysis focuses on are

Accepted Answer

A)  Is output greater than or less than expected and is the difference a matter of concern 
B)  Is financial performance better or worse than expected and is the difference a matter of concern 
C)  Is output greater than or less than expected and are managers responsible for the difference 
D)  Is financial performance better or worse than expected and are managers responsible for the difference 
A)  Is output greater than or less than expected and is the difference a matter of concern 
B)  Is financial performance better or worse than expected and is the difference a matter of concern 
C)  Is output greater than or less than expected and are managers responsible for the difference 
D)  Is financial performance better or worse than expected and are managers responsible for the difference

Question 14

An intensity variance examines the difference between

Accepted Answer

A)  The budgeted and actual per unit cost of inputs 
B)  The budgeted and actual number of inputs used to complete an activity 
C)  The budgeted and actual number of activities used to produce an output 
D)  The budgeted and actual number of outputs produced 
A)  The budgeted and actual per unit cost of inputs 
B)  The budgeted and actual number of inputs used to complete an activity 
C)  The budgeted and actual number of activities used to produce an output 
D)  The budgeted and actual number of outputs produced

Question 15

A decrease in the number of patients treated would create

Accepted Answer

A)  Unfavorable volume variance 
B)  Favorable volume variance 
C)  Unfavorable price variance 
D)  Favorable price variance 
A)  Unfavorable volume variance 
B)  Favorable volume variance 
C)  Unfavorable price variance 
D)  Favorable price variance

Question 16

The formula for the efficiency variance is

Accepted Answer

A)  (Actual output - Budgeted output)*Budgeted cost/output 
B)  ((Actual cost/Actual input) - (Budgeted cost/Budgeted input))*Actual quantity of input used 
C)  (Actual inputs/Actual activity - Budgeted inputs/Budgeted activity)*Budgeted cost/input * Actual activities produced 
D)  (Actual activity/Actual output - Budgeted activity/Budgeted output)*Budgeted cost per activity*Actual output 
A)  (Actual output - Budgeted output)*Budgeted cost/output 
B)  ((Actual cost/Actual input) - (Budgeted cost/Budgeted input))*Actual quantity of input used 
C)  (Actual inputs/Actual activity - Budgeted inputs/Budgeted activity)*Budgeted cost/input * Actual activities produced 
D)  (Actual activity/Actual output - Budgeted activity/Budgeted output)*Budgeted cost per activity*Actual output

Question 17

An increase in the proportion of older and sicker patients in a provider's patient mix would be identified by a larger

Accepted Answer

A)  Price variance 
B)  Efficiency variance 
C)  Intensity variance 
D)  Volume variance 
A)  Price variance 
B)  Efficiency variance 
C)  Intensity variance 
D)  Volume variance

Question 18

The chief weakness with using the dollar threshold decision rule to determine which variances to investigate is

Accepted Answer

A)  Although the dollar amount may be large it could be a very low percentage of total outlays for an input 
B)  It would require investigation of small dollar variance that are a high percentage of the total outlay for an input 
C)  It may allow expenses to over-run their budgets by large dollars amounts or percentages and not be examined 
D)  It maximizes the number of line items that must be examined 
E)  All of the above 
A)  Although the dollar amount may be large it could be a very low percentage of total outlays for an input 
B)  It would require investigation of small dollar variance that are a high percentage of the total outlay for an input 
C)  It may allow expenses to over-run their budgets by large dollars amounts or percentages and not be examined 
D)  It maximizes the number of line items that must be examined 
E)  All of the above

Question 19

The variance analysis decision rule that minimizes the number of expenses or object codes that must be examined is

Accepted Answer

A)  A dollar threshold 
B)  A percentage threshold 
C)  The AND combination rule 
D)  The OR combination rule 
A)  A dollar threshold 
B)  A percentage threshold 
C)  The AND combination rule 
D)  The OR combination rule

Question 20

Variance reporting is used to

Accepted Answer

A)  Improve operations 
B)  Evaluate manager's performance 
C)  Evaluate the accuracy of planning and forecasting processes 
D)  Evaluate the accuracy of expense estimation processes 
E)  All of the above 
A)  Improve operations 
B)  Evaluate manager's performance 
C)  Evaluate the accuracy of planning and forecasting processes 
D)  Evaluate the accuracy of expense estimation processes 
E)  All of the above

A price variance examines the difference between

To avoid going over budget, managers postpone discretionary until the end of the year.

Performance improvement requires that only unfavorable variances be examined.

A cost variance includes the impact of all the following factors EXCEPT

The total variance must always equal the sum of the price, efficiency, intensity, and volume variances.

Which of the following would create an unfavorable price variance beyond the control of the manager?

An increase in the time necessary to complete an activity,E.g., take a history and physical, would be identified by a larger

Over-production would create an unfavorable and non-controllable volume variance.

The variance that examines the difference between the budgeted and actual number of outputs produced is

Managers should be credited or praised when

The formula for the volume variance is

Which variance is least likely to be in the control of healthcare managers?

The two questions variance analysis focuses on are

An intensity variance examines the difference between

A decrease in the number of patients treated would create

The formula for the efficiency variance is

An increase in the proportion of older and sicker patients in a provider's patient mix would be identified by a larger

The chief weakness with using the dollar threshold decision rule to determine which variances to investigate is

The variance analysis decision rule that minimizes the number of expenses or object codes that must be examined is

Variance reporting is used to

Financial Planning and Management

Accounting and Economics

Budget Incentives and Strategies

Output Forecasts and Revenue Budgets

Scratch Budgeting

Incremental Budgeting

Flexible Budgeting

Zero-Base Budgeting

Program Budgeting

Activity-Based Budgeting

Ratio Analysis and Operating Indicators

Capital Budgeting

Cost-Benefit Analysis, Cost-Effectiveness Analysis, and Program Evaluation

Financial Functions in Finance

Strategic Financial Planning

Financial Management and Health Care

Filters

Exam 11: Variance Analysis

A price variance examines the difference between

To avoid going over budget, managers postpone discretionary until the end of the year.

Performance improvement requires that only unfavorable variances be examined.

A cost variance includes the impact of all the following factors EXCEPT

The total variance must always equal the sum of the price, efficiency, intensity, and volume variances.

Which of the following would create an unfavorable price variance beyond the control of the manager?

An increase in the time necessary to complete an activity,E.g., take a history and physical, would be identified by a larger

Over-production would create an unfavorable and non-controllable volume variance.

The variance that examines the difference between the budgeted and actual number of outputs produced is

Managers should be credited or praised when

The formula for the volume variance is

Which variance is least likely to be in the control of healthcare managers?

The two questions variance analysis focuses on are

An intensity variance examines the difference between

A decrease in the number of patients treated would create

The formula for the efficiency variance is

An increase in the proportion of older and sicker patients in a provider's patient mix would be identified by a larger

The chief weakness with using the dollar threshold decision rule to determine which variances to investigate is

The variance analysis decision rule that minimizes the number of expenses or object codes that must be examined is

Variance reporting is used to

Financial Planning and Management

Accounting and Economics

Budget Incentives and Strategies

Output Forecasts and Revenue Budgets

Scratch Budgeting

Incremental Budgeting

Flexible Budgeting

Zero-Base Budgeting

Program Budgeting

Activity-Based Budgeting

Ratio Analysis and Operating Indicators

Capital Budgeting

Cost-Benefit Analysis, Cost-Effectiveness Analysis, and Program Evaluation

Financial Functions in Finance

Strategic Financial Planning

Financial Management and Health Care

Filters