Variance analysis refers to a process that deals with the evaluation and assessment of deviations in a company’s budgeted and actual financial performance. Organizations use the deviations to identify areas of improvement in their operations. They also do use the analyzed differences between the actual outcomes and budgeted numbers to determine whether or not their business budgets are unrealistic. In case the deviations display unrealistic numbers, the budgets can always be revised. Organizations apply the concept of analysis into their management operations in many ways. They use the concept to maintain control over a project’s expenses by monitoring the actual verse planned budget (Cleverley, 2017). Organizations also use variance analysis to spot trends, issues, opportunities, and threats to their long and short-term business goals.
An example of how the concept can be used in business operations is hereby provided. If an individual budget for sales of his products to be $10,000 in a particular month, and the actual sales for that month yields &8,000, the concept of variance analysis helps to yield the difference between the actual and the planned sales. Variance analysis in this case also helps the individual to identify what factors may have contributed to the deviation in sales if at all the preceding month he had achieved the $10,000 sales objective. In this case, very many factors such as late product deliveries may have contributed to the deviation, thus by applying the concept of variance analysis, the seller can develop effective strategies on how to fill the existing gaps.
Why A Dollar Today Is Worth More Than A Dollar in The Future
All business majors are acquainted with the basic principle of the time value of money. This principle asserts that the dollar today is worth more than a dollar tomorrow. The value of money should be preserved. However, the truth is that it is hard for the global economy to preserve the value of money. The intuition behind this is that consumers’ purchasing powers are directly linked to inflation rates. This simply means that with the inflation rate constantly increasing over the years, the consumer’s purchasing power will decrease. Consumer purchasing power represents the actual value of consumers’ money measured in the commodities and services they can acquire. Therefore, assuming that the inflation rate constantly increases within the global economy, the value of the dollar today will not be the same tomorrow. Besides, the change in the value of the dollar between today and tomorrow may also depend on another factor such as opportunity cost. Opportunity cost, in this case, refers to the ability of an individual to invest the money he or she has now, rather than spend it. For instance, when an individual invests $400,000 today, it means that in months or years times he will have acquired the principal amount of money he invested and will have accrued interest.
The merger between Carrier Clinic and the Hackensack Meridian Health System is one of the healthcare mergers encountered last year across the United States. Hackensack Meridian Health is one of the largest integrated healthcare systems in New Jersey. The organization finalized its merger with New Jersey’s leading behavioral provider to improve care for patients. It was a right decision for the two health settings to merge as it was meant to help in coordinating physical and behavioral health for patients and open more addiction treatment centers for the growing number of opioid users across the U.S. In my perspective, the merger between the two health settings should not only focus on the patients’ physical and behavioral health but also on providing value-based care to improve their health outcomes.
Cleverley, W. O., & Cleverley, J. O. (2017). Essentials of health care finance. Burlington, MA: Jones & Bartlett Learning.