| Course | HA520 Health Care Financial Management |
|---|---|
| Unit | Unit 7 |
| Paper type | Budget variance analysis |
| Length | About 850 words, 6 pages double-spaced |
| Format | APA 7 student paper |
| School | Purdue University Global |
| Program | Master of Health Administration (MHA) |
| Updated | October 2026 |
Free sample paper for HA520 Unit 7
A Small Shortfall Hiding Large Moves: A Budget Variance Analysis of a Composite Hospital Imaging Department That Flexes the Budget to Actual Volume and Splits Every Material Line Into Volume, Rate and Efficiency Pieces
[Student Name]
Purdue University Global
HA520: Health Care Financial Management
Unit 7 Budget Variance Analysis
[Instructor Name]
[Date]
The department and every figure are composite and bracketed, continuing the operating budget from Unit 6; the analysis is a course model.
Why Flex the Budget
A static budget compares actual results with the plan at the volume originally forecast. When volume changes, many costs should change too, so a static comparison can make a department look efficient when it is not, or wasteful when it is simply busy. A flexible budget recalculates expected revenue and variable costs at actual volume, leaving only differences caused by prices and efficiency (Datar & Rajan, 2021). MRI labor shows why: against the static budget it appears only [$33,734] over, but against the flexible budget it is [$68,693] over.
Volumes
MRI: budget [7,200]; actual [6,780]; [420] short. CT: budget [11,400]; actual [11,950]; [550] ahead.
Revenue Variances
MRI volume variance: [420] scans × [$498] = [$209,160] unfavorable. MRI rate variance: net revenue per scan fell from [$498] to [$486]; [6,780] × [$12] = [$81,360] unfavorable. CT volume variance: [550] × [$286] = [$157,300] favorable. CT rate variance: net revenue per scan rose to [$290]; [11,950] × [$4] = [$47,800] favorable. Net revenue variance: [$85,420] unfavorable. The MRI rate decline traces to payer mix: more Medicare Advantage and fewer commercial patients among MRI referrals, consistent with the drift modeled in Unit 5. The CT rate rise reflects a new commercial contract effective in the second quarter. The total revenue shortfall is small because a large unfavorable MRI story and a large favorable CT story nearly cancel each other out.
MRI Technologist Labor
Static budget: [12,888] hours, [$599,292]. Flexible budget at actual volume: [6,780] × [1.79] = [12,136] hours, [$564,333]. Actual: [12,892] hours, [$633,026], including [1,065] agency hours. Efficiency variance: [756] hours more than the flexible budget allows, at [$46.50], [$35,145] unfavorable. Hours did not fall with volume because the department kept its full MRI schedule open while referrals dropped. Rate variance: [1,065] agency hours at a [$31.50] premium, [$33,548] unfavorable, used to cover two vacant positions.
MRI Contrast
Flexible budget: [6,780] × [$38] = [$257,640]. Actual: [$279,336]. Variance: [$21,696] unfavorable, from a price increase on one gadolinium agent and more studies requiring contrast.
CT Technologist Labor
Flexible budget: [11,950] × [1.35] = [16,133] hours, [$750,161]. Actual: [15,890] hours, [$738,885]. Efficiency variance: [$11,276] favorable, as staff absorbed higher volume within existing shifts.
Fixed Costs
Teleradiology ran [$11,000] over as overnight volume rose. Service contracts and depreciation matched the budget.
What the Variances Mean
MRI has three problems: falling referrals, a worse payer mix and staffing that did not adjust. CT is performing well. The department's total looks acceptable only because CT's gains offset MRI's losses.
What the Manager Controls
Not every variance belongs to the imaging manager. The rate variance on MRI revenue comes from payer mix, which the manager cannot set. The volume variance comes partly from referral patterns. But the efficiency variance, hours that did not fall with volume, and the decision to cover vacancies with agency staff are within the department's control. A fair review separates the two, so the manager is held to account for scheduling and recruitment, not for a shift in insurance coverage.
A Second Look at MRI Referrals
The volume loss deserves its own inquiry. Referral data show the drop concentrated among two orthopedic practices that began sending patients to a freestanding imaging center offering appointments within [three] days, compared with the hospital's [19]-day wait. That finding links this variance to the capital request in Unit 8, where a second scanner is evaluated.
Costing Beyond the Department
Kaplan and Porter argue that health care organizations misjudge cost because they measure departments rather than the resources each patient's care consumes (Kaplan & Porter, 2011). The flexible budget is a step in that direction: it ties expected cost to each scan rather than to last year's departmental total.
Responses
1. MRI scheduling: reduce scheduled MRI hours on low-demand afternoons and match staffing to the new volume.
2. MRI recruitment: fill the two vacancies to end agency use.
3. Referrals: investigate why MRI referrals fell, including wait times compared with a freestanding center.
4. Contrast: review the contrast formulary with radiologists.
5. CT: protect the new contract and capacity.
Health care finance texts present a variance as a prompt to find causes, not as a verdict on the manager, and the responses here follow that approach (Cleverley & Cleverley, 2018).
Limits
Variances are measured against a budget that may itself have been imperfect. The payer mix explanation is inferred from billing data and should be confirmed.
Conclusion
A [$85,420] shortfall hid a [$209,160] MRI volume problem, an [$81,360] rate problem and [$68,693] of labor excess. Flexing the budget and splitting each variance turned a small number into a clear agenda for the MRI service.
References
Cleverley, W. O., & Cleverley, J. O. (2018). Essentials of health care finance (8th ed.). Jones & Bartlett Learning.
Datar, S. M., & Rajan, M. V. (2021). Horngren's cost accounting: A managerial emphasis (17th ed.). Pearson.
Kaplan, R. S., & Porter, M. E. (2011). How to solve the cost crisis in health care. Harvard Business Review, 89(9), 46-64.
Reading the HA 520 Unit 7 instructions
Unit 7 typically asks students to compare actual results with budget for a health care department and explain the differences. Instructions usually require a flexible budget at actual volume, separation of volume, price or rate and efficiency variances, identification of favorable and unfavorable items, explanations of causes and recommended responses. Expect to cite cost accounting and health care finance sources in APA style, build on the operating budget from an earlier unit if possible, mark figures that are composite and leave the hospital unnamed. Explaining why the static budget misleads when volume changes, with one worked line, helps readers trust everything that follows in the analysis. State the period covered.
How the HA 520 Unit 7 example is put together
The sample opens by explaining why the static budget is the wrong comparison, citing a cost accounting text, with a margin note. Volumes and four revenue variances follow, and the highlighted sentence notes how MRI losses and CT gains cancel. MRI labor is split into efficiency and agency rate variances, then MRI contrast and CT labor are analyzed, with a margin note on splitting labor lines. Fixed costs and the meaning of the variances follow, with a third note. Sections on what the manager controls, a closer look at MRI referrals, costing beyond the department, five responses citing a finance text, limits of inferred payer mix explanations and a conclusion close the analysis.
HA520 Unit 7 rubric: what earns full points
Variance analysis rubrics in HA 520 tend to give points for flexing the budget, calculating variances correctly, separating variance types, labeling favorable and unfavorable items, explaining causes, recommending responses and citing sources. Flexing points depend on recalculating revenue and variable costs at actual volume. Calculation points go to correct arithmetic. Separation points reward volume, rate and efficiency pieces. Labeling points require correct direction. Cause points go to specific explanations tied to data. Response points need actions within the manager's control. Analyses that distinguish controllable from uncontrollable variances tend to be graded highest, as fair accountability depends on that line. Linking a variance to a later decision, such as a capital request, also earns credit.
HA520 Unit 7 help from the desk
Variance papers often lose points by comparing actual with the static budget only, which hides efficiency problems when volume falls. Another gap is reporting variances without causes. Some papers blame the manager for payer mix changes. Others mislabel favorable and unfavorable revenue and cost variances. Flex the budget, split each material line, label each variance, trace causes to data such as agency hours or payer shifts and separate what the manager controls. Then link the findings to decisions, such as staffing or a capital request. Showing one worked line, step by step, makes the method clear and lets a reader check the rest.
Get an HA520 Unit 7 example written to your instructions
Budget and actual figures from the Unit 7 case, volumes and hours included whenever the case supplies them, let the analysis flex properly; add the instructions and rubric. Within 24-48h the analysis separates volume, rate and efficiency with formulas shown and ties each variance to a cause a manager controls. First requests cost nothing. The paper above is an original model document written by our desk, not a submitted student paper and not an official Purdue University Global document.
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HA520 Unit 7 questions, answered
Where can I find a free HA520 Unit 7 sample paper?
This page has the full HA520 Unit 7 budget variance analysis of a composite imaging department, flexing the budget and splitting each line into volume, rate and efficiency, with three sources. Your own department's variances can be analyzed the same way.
What is a flexible budget?
A budget recalculated at actual volume, so revenue and variable costs reflect the activity that actually occurred.
What is an efficiency variance?
The difference between the hours or inputs actually used and those the flexible budget allows, priced at the standard rate.
What is a volume variance in revenue?
The revenue difference caused by a change in units, such as scans, priced at the budgeted rate per unit.
How long is the HA520 Unit 7 analysis?
About five pages built around a four-column variance table.