| Course | NUR-5820 Financial Management in Nursing Practice |
|---|---|
| Module | Module 4 |
| Paper type | Variance analysis |
| Length | About 1,055 words, 6 pages |
| Format | APA 7 student paper |
| School | Thomas Edison State University |
| Program | Master of Science in Nursing |
| Updated | October 2026 |
Free sample paper for NUR 5820 Module 4
Explaining January's $85,824: A Flexible Budget Variance Analysis of Telemetry Unit Personnel Costs and the Actions It Supports
Student Name
Master of Science in Nursing (MSN), Thomas Edison State University
NUR-5820: Financial Management in Nursing Practice
Mentor Name
Month Day, Year
Explaining January's $85,824: A Flexible Budget Variance Analysis of Telemetry Unit Personnel Costs and the Actions It Supports
In January, direct-care personnel costs on our 30-bed telemetry unit exceeded the budget by $85,824, about 20%. The finance department's report flagged the overrun in red, and the director of nursing asked for an explanation. This paper analyzes the variance using a flexible budget, which isolates three causes: a busier month, extra hours for each patient and a higher price for each hour worked. It then explains the causes behind each part and sets out actions, distinguishing variances the manager can control from those that reflect conditions the budget did not anticipate.
Why a Static Comparison Misleads
The monthly report compares actual spending with the static budget, which was set before the year began for a fixed volume. January's budget assumed 837 patient days, based on 90% occupancy for 31 days. The unit actually had 868 patient days, at about 93% occupancy, because of a winter rise in heart failure and atrial fibrillation admissions. Comparing actual costs with a budget for fewer patients mixes the effect of volume with the effect of management decisions. A flexible budget recalculates what costs should have been at the actual volume, using the budgeted hours per patient day and the budgeted cost per hour.
| Measure | Static budget | Flexible budget | Actual |
|---|---|---|---|
| Patient days | 837 | 868 | 868 |
| Direct-care hours (9.6 per patient day) | 8,035 | 8,333 | 8,960 |
| Average cost per hour | $52.67 | $52.67 | $56.81 |
| Direct-care personnel cost | $423,247 | $438,922 | $509,037 |
Splitting the Variance
The total variance of $85,824 divides into three parts. The volume variance, $15,675, is what the flexible budget allows beyond the original plan; it is the extra cost the budget itself would have allowed for 31 more patient days, and it is not a sign of poor management. The quantity, or efficiency, variance, $33,035, arises because the unit worked 8,960 direct-care hours rather than the 8,333 the standard allowed for 868 patient days, an extra 627 hours valued at the budgeted rate. The price, or rate, variance, $37,114, arises because the average cost of each hour was $56.81 rather than the budgeted $52.67.
| Variance | Calculation | Amount | Direction |
|---|---|---|---|
| Volume | Flexible budget minus static budget | $15,675 | Unfavorable, explained by census |
| Quantity (efficiency) | (8,960 minus 8,333 hours) times $52.67 | $33,035 | Unfavorable |
| Price (rate) | Actual cost minus 8,960 hours at $52.67 | $37,114 | Unfavorable |
| Total | Actual minus static budget | $85,824 | Unfavorable |
Causes of the Quantity Variance
Time records and the unit's acuity notes explain most of the extra 627 hours. About 410 hours were one-to-one observation by patient care technicians for three patients with delirium who were at high risk of falls and pulling out lines; sitter hours are charged to the unit but are not included in the 9.6 hours per patient day standard. Another 217 hours came from assigning registered nurses three patients instead of four when several patients were receiving titrated intravenous antiarrhythmic infusions, which our policy requires. Neither cause reflects inefficiency in the usual sense, but both show that the staffing standard does not adjust for acuity.
Pappas (2008) argued that unit-level cost accounting allows nursing leaders to measure the costs that complications add to a hospital stay and to use that information in staffing decisions. The same principle applies here: the manager should present the sitter and infusion hours as acuity-driven care, document them consistently, and use them to support a request either for an acuity adjustment to the standard or for alternatives to sitters, which the final module of this course will examine.
The infusion assignments raise a separate question about the standard itself. If titrated infusions are now routine on the unit, the 9.6 standard may simply be out of date, and the right response is to revisit it with the nursing department rather than to keep explaining the same variance each month.
Causes of the Price Variance
The higher cost per hour came from how the hours were filled. The unit had three registered nurse vacancies in January. To cover them, staff worked 690 overtime hours at time and a half, costing about $56,100, and the hospital contracted 240 hours from a nursing agency at a bill rate of $125 an hour, or $30,000. Both cost far more per hour than regular staff. Xue et al. (2015) examined 19 adult units in an academic medical center and found that modest use of agency nurses was cost-efficient for overall personnel costs, but heavy reliance was not, and the hourly personnel cost of agency nurses was not statistically different from that of overtime by permanent staff. Quality concerns about agency staff may also be overstated: Aiken et al. (2007) found that temporary nurses had qualifications similar to permanent staff and that poorer outcomes in hospitals using more of them were explained by weaker care environments.
Actions
The manager can act on the price variance most directly. Actions include filling the three vacancies, two of which have accepted offers with February start dates; offering internal float pool shifts before agency shifts; and limiting overtime to voluntary shifts no longer than four hours past a scheduled shift. For the quantity variance, the manager will work with the delirium prevention team on earlier screening and with pharmacy on infusion protocols, track sitter hours separately on the monthly report, and ask finance whether a separate budget line for one-to-one observation is possible. The volume variance needs no corrective action, but the manager will ask that monthly reports show the flexible budget alongside the static one so the director sees census-driven costs separately.
The manager will also prepare a short narrative for the director, because variance reports travel upward. The narrative will state the total variance, its three parts, the causes and the actions in a single page, with a forecast for February that reflects the two new hires and the expected fall in winter admissions. A forecast shows that the manager is managing ahead rather than only explaining the past.
Conclusion
January's overrun looked alarming as a single number. Split into its parts, about 18% of it came from more patients, 38% from acuity-driven hours the standard does not cover and 43% from filling vacancies at premium rates. Each part calls for a different response, and only one of them, the cost of vacancies, is mainly within the manager's control in the short term.
References
Aiken, L. H., Xue, Y., Clarke, S. P., & Sloane, D. M. (2007). Supplemental nurse staffing in hospitals and quality of care. JONA: The Journal of Nursing Administration, 37(7/8), 335-342. https://doi.org/10.1097/01.nna.0000285119.53066.ae
Pappas, S. H. (2008). The cost of nurse-sensitive adverse events. JONA: The Journal of Nursing Administration, 38(5), 230-236. https://doi.org/10.1097/01.nna.0000312770.19481.ce
Xue, Y., Chappel, A. R., Freund, D. A., Aiken, L. H., & Noyes, K. (2015). Cost outcomes of supplemental nurse staffing in a large medical center. Journal of Nursing Care Quality, 30(2), 130-137. https://doi.org/10.1097/ncq.0000000000000100
What the NUR 5820 Module 4 instructions ask for
Module 4 of NUR-5820 commonly asks you to analyze budget variances. Directions may give you a variance report or case data and ask you to calculate variances, explain their causes, identify which are controllable, and propose corrective actions. Some sections specifically require a flexible budget and volume, quantity and price variances; others accept a simpler comparison. Check the classroom for the formulas expected, whether calculations must be shown in a table or spreadsheet, and how the explanation should be organized. When you invent illustrative causes, make them realistic and consistent with the numbers. Many sections also ask for a brief forecast or plan for next month.
Inside the NUR 5820 Module 4 example
The paper begins with the overrun and why it needs explaining. It shows why a static comparison misleads and builds a flexible budget in a table. The splitting section calculates volume, quantity and price variances in a second table and explains each one plainly. The quantity section traces extra hours to sitters and infusion assignments and argues for acuity documentation with evidence on unit-level costing. The price section traces higher hourly cost to overtime and agency use and summarizes research on supplemental staffing. Actions are organized by variance, and the conclusion states each part's share of the total. A short narrative and forecast for the director round out the actions.
NUR 5820 Module 4 rubric: what earns full marks
Variance assignments are commonly judged on correct calculations, use of a flexible budget, accurate labeling of variances as favorable or unfavorable, plausible and specific explanations of causes, a distinction between controllable and uncontrollable variances, actions matched to causes, use of evidence and clear writing. Every subtotal should sum to its total; mentors check that the budget reconciles. Explanations should go beyond restating the variance. Actions that fit the cause, rather than general cost-cutting, show managerial judgment. Tables that present budget, flexible budget and actual side by side make work easy to assess. A forecast for the next month shows the manager is looking ahead.
Common NUR 5820 Module 4 mistakes, and how to avoid them
Students often explain a personnel overrun by saying census was high, without separating volume from efficiency and rate. Build the flexible budget first. Another frequent error is mislabeling variances, especially when costs are above budget but justified by volume. Add the three parts back together; if they do not reproduce the overrun, an arithmetic step has slipped. Make each cause specific and tie it to a number of hours or dollars. Avoid proposing cuts to hours that acuity requires. If your directions give a variance report, use its labels and figures. The desk can work through a variance analysis from your case data and write the explanation. Write the one-page narrative a director would actually read. Keep the tone factual rather than defensive.
Write yours, or have the desk draft it
This paper is an original model document written by our desk, not a submitted student paper and not an official Thomas Edison State University document. Read it for the moves, then write your own to the instructions in your classroom. If you want one built to your exact prompt and rubric, the first custom sample is free and arrives in 24 to 48 hours.
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NUR 5820 Module 4 questions, answered
Where can I find a free NUR 5820 Module 4 sample paper?
A complete variance analysis is above, with flexible budget and variance tables and notes on each sheet. Follow its order of flexible budget, split, causes and actions for your own case.
What is a flexible budget?
A budget recalculated for the actual volume using the original standards, such as hours per patient day and cost per hour. The gap between it and the original budget is what census alone explains.
What is the difference between quantity and price variance?
A quantity variance comes from using more or fewer resources than the standard allows at the actual volume. A price variance comes from paying more or less per unit, such as per hour.
Is a volume variance a sign of poor management?
Usually not. It reflects more or fewer patients than budgeted. The manager is accountable for responding to volume, not for the volume itself.
Do agency nurses cost more than overtime?
Both cost more than regular staff. One academic center study found no statistical difference in hourly personnel cost between agency nurses and overtime by permanent nurses.