NR 630 Week 4 Assignment: FTE/Variance Assignment

Introduction

The NR 630 Week 4 Assignment focuses on developing financial management skills essential for nursing executives. This assignment is divided into two sections: calculating full-time equivalents (FTEs) and performing variance analysis. These skills are critical for effective resource management, budget planning, and financial oversight in healthcare settings.

Purpose

The primary purpose of this assignment is to provide learners with the opportunity to:

• Develop skills in calculating full-time equivalents for a nursing unit.
• Analyze variances to assess financial performance and resource allocation.

Requirements

Submission Format:

• Submit responses and calculations in a Word document titled “Week 4 Assignment.”
• For written responses, ensure proper grammar and syntax, and include references.
• For calculations, show all work and follow the format provided in the Week 4 lesson.

Section One: Calculation of Full-Time Equivalents (FTEs)

Personnel Budget Case Study:

To understand FTE calculations, consider the following case study:

Scenario:

You are the nurse manager of a busy medical-surgical unit. The hospital’s budget includes staffing requirements for various shifts. You need to calculate the total number of full-time equivalents required to meet the staffing needs based on the budgeted hours and actual hours worked.

Data:

1. Budgeted Hours:
   • Day Shift: 8 hours/day
   • Evening Shift: 8 hours/day
   • Night Shift: 8 hours/day
   • Total Budgeted Hours per Week: 1,680 hours
2. Actual Hours Worked:
   • Day Shift: 600 hours
   • Evening Shift: 500 hours
   • Night Shift: 550 hours
   • Total Actual Hours Worked per Week: 1,650 hours
3. Staffing Levels:
   • Full-Time Position: 40 hours/week
   • Part-Time Position: 20 hours/week

Tasks:

1. To calculate FTEs, use the following formula:Total FTEs Needed=Total Budgeted HoursHours per FTE\text{Total FTEs Needed} = \frac{\text{Total Budgeted Hours}}{\text{Hours per FTE}}Total FTEs Needed=Hours per FTETotal Budgeted Hours​Where:Total FTEs Needed=1,68040=42 FTEs\text{Total FTEs Needed} = \frac{1,680}{40} = 42 \text{ FTEs}Total FTEs Needed=401,680​=42 FTEs
   • Total Budgeted Hours = 1,680 hours
   • Hours per FTE = 40 hours/week
2. To calculate actual FTEs, use the following formula:Actual FTEs=Total Actual Hours WorkedHours per FTE\text{Actual FTEs} = \frac{\text{Total Actual Hours Worked}}{\text{Hours per FTE}}Actual FTEs=Hours per FTETotal Actual Hours Worked​Where:Actual FTEs=1,65040=41.25 FTEs\text{Actual FTEs} = \frac{1,650}{40} = 41.25 \text{ FTEs}Actual FTEs=401,650​=41.25 FTEs
   • Total Actual Hours Worked = 1,650 hours
   • Hours per FTE = 40 hours/week

Section Two: Variance Analysis

Variance Analysis Case Study:

Variance analysis is used to assess the difference between budgeted and actual financial performance. In this section, we will analyze the variance between budgeted and actual staffing costs.

Data:

1. Budgeted Staffing Costs:
   • Day Shift: $25,000
   • Evening Shift: $20,000
   • Night Shift: $22,000
   • Total Budgeted Staffing Costs: $67,000
2. Actual Staffing Costs:
   • Day Shift: $24,000
   • Evening Shift: $22,500
   • Night Shift: $23,500
   • Total Actual Staffing Costs: $70,000

Tasks:

1. Variance can be calculated using the formula:Variance=Actual Costs−Budgeted Costs\text{Variance} = \text{Actual Costs} - \text{Budgeted Costs}Variance=Actual Costs−Budgeted Costs
   • Day Shift Variance=24,000−25,000=−1,000 (Favorable)\text{Day Shift Variance} = 24,000 - 25,000 = -1,000 \text{ (Favorable)}Day Shift Variance=24,000−25,000=−1,000 (Favorable)
   • Evening Shift Variance=22,500−20,000=2,500 (Unfavorable)\text{Evening Shift Variance} = 22,500 - 20,000 = 2,500 \text{ (Unfavorable)}Evening Shift Variance=22,500−20,000=2,500 (Unfavorable)
   • Night Shift Variance=23,500−22,000=1,500 (Unfavorable)\text{Night Shift Variance} = 23,500 - 22,000 = 1,500 \text{ (Unfavorable)}Night Shift Variance=23,500−22,000=1,500 (Unfavorable)
2. Total Variance:Total Variance=Total Actual Staffing Costs−Total Budgeted Staffing Costs\text{Total Variance} = \text{Total Actual Staffing Costs} - \text{Total Budgeted Staffing Costs}Total Variance=Total Actual Staffing Costs−Total Budgeted Staffing CostsTotal Variance=70,000−67,000=3,000 (Unfavorable)\text{Total Variance} = 70,000 - 67,000 = 3,000 \text{ (Unfavorable)}Total Variance=70,000−67,000=3,000 (Unfavorable)
3. Discuss the potential reasons for these variances, such as increased overtime, staffing shortages, or changes in staffing levels. Evaluate how these variances impact overall financial performance and what corrective actions might be necessary.
   • Favorable Variance: Occurs when actual costs are lower than budgeted costs. In this case, the Day Shift has a favorable variance of $1,000.
   • Unfavorable Variance: Occurs when actual costs exceed budgeted costs. The Evening and Night Shifts have unfavorable variances of $2,500 and $1,500, respectively.

Conclusion

This assignment emphasizes the importance of accurate financial management in nursing units. By calculating FTEs and analyzing variances, nursing executives can make informed decisions about staffing levels, budget adjustments, and resource allocation. Understanding these financial metrics is crucial for maintaining operational efficiency and achieving organizational goals.

References

• Garrison, R. H., Noreen, E. W., & Brewer, P. C. (2021). Managerial Accounting: Creating Value in a Dynamic Business Environment. McGraw-Hill Education.
• American Health Care Association. (2021). Understanding Financial Statements in Healthcare. Retrieved from AHCA
• Dorsey, J. (2022). Healthcare Finance: An Introduction. Health Administration Press.