# Variance Problems: Total Cost Incurred by Organizations (Math Problem Sample)

Variance Problems:

1. Last year the price for thermometer covers in a pediatrician’s office was $.05 each. This year, the covers cost $.06 each. If the office purchased 10,000 thermometer covers this year, what is the price variance? Is it favorable or unfavorable?

Price variance = (Present price – Old price) × Present quantity = _____________________ F or U ?

2. Management has studied work patterns in the housekeeping department and estimates the number of hours to be worked as follows. Hours worked = (1,500 hours per month) + (0.50 × RVUs). For the coming month, management expects RVUs to be 5,800. What should budgeted labor for the month be?

Flexible Budget = Hours worked + (0.5 X RVUs) = ________________ Hours

3. Efficiency cost is a term that involves:

A. The amount of time that a problem goes uncorrected

B. Cost per unit of time

C. Probability the problem occurrence is correctable

D. All of the above.

Variance Problems

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1] Last year the price for thermometer covers in a pediatrician’s office was $.05 each. This year, the covers cost $.06 each. If the office purchased 10,000 thermometer covers this year, what is the price variance? Is it favorable or unfavorable?

Price variance = (Present price – Old price) × Present quantity = _ (0.06-0.05)*10,000= 100______U______________ F or U?This is an unfavorable variance since the pediatrician’s office had initially budgeted using the old price of $.05 that then increased by $.01.

2] Management has studied work patterns in the housekeeping department and estimates the number...

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