An Unfavorable Rate Variance Has Occurred in the Salary Budget

question 26

Multiple Choice

An unfavorable rate variance has occurred in the salary budget of a unit. When investigating this variance, the nurse manager should look for which situations? Note: Credit will be given only if all correct choices and no incorrect choices are selected. Select all that apply.

• A) Were any unexpected bonuses awarded?
• B) Did agency personnel hours exceed the number predicted in the budget?
• C) Were new employees hired at lower wages?
• D) Did the number of client days exceed the predicted budgeted amount?
• E) Were fewer nursing hours worked than were predicted?

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Definitions:

Weighted-Average Method

A method for computing the cost of goods sold and the remaining inventory value that uses the mean cost of all available units.

Process Costing System

An accounting system used for homogenous products that are mass-produced, assigning costs to units of product based on the process they go through.

Equivalent Units

A concept in cost accounting used to allocate costs to partially completed goods, expressing the work done in terms of fully completed goods.

Weighted-Average Process

A method of accounting for inventory and production costs that averages costs over the units produced during a period, widely used in process manufacturing.