Question

An HIM department has an annual budget of $754,000 including staff, supplies, contracts, and benefits. The HIM director discovers a discrepancy in the budgeted amount for supplies, which is $10,000 more than the actual amount spent for the year. That difference is called what?

A. Variance
B. Overhead
C. Surplus
D. Overexpenditure

Answer 1

The difference of $10,000 between the budgeted amount for supplies and the actual amount spent represents a variance, specifically a surplus.

Step-by-step explanation:

The discrepancy in the budgeted amount for supplies compared to the actual amount spent is known as a variance. A variance occurs when there is a difference between what was budgeted and what was actually spent or received. In this case, the HIM department budgeted $10,000 more for supplies than what was actually needed, which resulted in a variance.

This kind of variance, where less is spent than budgeted, is specifically referred to as a favorable variance or a surplus. It is important for departments to regularly monitor their budget variances to manage finances effectively and make adjustments for future budgeting.