During the review of the previous budget with the actual numbers to determine variances, a price variance was discovered on the Orthopedic Unit. Which of the following scenarios might have resulted in this type of variance?
1. The minimum wage increased by 4%, and this affected the wages of three patient care assistants.
2. The cost of Foley catheter insertion kits increased by 9% during the last year.
3. The number of knee replacements performed decreased by 14%.
4. The unit began accepting postoperative clients from the Surgical Intensive Care Unit.
Answer: 2
Rationale: There are four types of variances: mix variance, volume variance, cost variance, and price variance. A price variance occurs when the actual amount of money paid for a product or service varies from the projected expense. When the price increased to buy a Foley catheter insertion tray, it produced a price variance. A cost variance occurs when labor rates increase or decrease. A mix variance or volume variance can occur as a result of a change in the type of clients the unit serves. Volume variances typically occur based on a change in a specific type of utilization rate of some service.
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