Capital Purchase Justification Research Assignment

Variance Reporting
Student’s Name
Institutional Affiliation
Variance Reporting
The purpose of the paper is to discuss the comparison of actual figures budgeted data as variance analysis. For this reason, two areas of salaries and supplies are addressed as well as examining the concept of variance reporting.
Variance reporting refers to a process of investigating and analyzing the changes in variances between the budgeted and actual cost to ascertain the reason as to why the budgeted figures recorded either neutral, adverse or favorable variances (Brown, 2015). Therefore, several critical factors ought to be considered to write a good variance report. The elements are pinned inform of assumptions (Brown, 2015). One the factor is the actual expenses that are used to display the organization budget. Second, the premise of the department and the risk of assumption. This is because the institution vice president has a duty to announce the budgeted in to be satisfied every month. In the case at hand, the salaries appeared to record adverse variances compared to the budgeted placed on supplies (Brown, 2015).
Thus, to explain the relationships between variance reporting, interpreting variance report results, and actual results of performance, it is important to address the reason why the salaries surpassed the budgeted amount and the actual reasons why the budgeted materials were not met (Young, 2014). For instance, the vice president ought to assume on how to utilize the allocated amount prudently upon receiving the monthly budgets. Considering the fact that employees require necessary materials and tools to carry out their duties and responsibilities, budgeted allocation ought to be dispersed appropriately (Young, 2014). For example, since the organization is a healthcare facility, the supplies management is run by the material management department, which is bestowed with a duty to ensure the required supplies such as computers, carts, drugs and scanners for the smooth running of the activities. Notably, some of these supplies such as computers and cart have a long life span and can be purchased before the opening of the facility. For this reason, management should understand that sometimes the monthly budgeted for the supplies cannot be met leading to adverse variances. A solution to this problem is to practice under-budgeting on the s...