In an effort to ensure centers are costing their rates appropriately a variance analysis report reflecting the previous year’s estimated costs to actual costs must be submitted within 45 days after the close of the rate cycle. The report should include an explanation of any material differences, i.e., +\- 10% or more AND +/- $5,000 or more, from the original cost estimate. If there are any material encumbrances they should also be reflected.
For example, if the estimate for salaries was $30,000 and the variance +$3,500 an explanation would NOT be required as the variance is less than $5,000 even though it is greater than 10%. Similarly, if the salary estimate was $75,000 and the variance +$5,500, an explanation would NOT be required because the variance is less than 10%. Only if the variance dollar amount is equal to or greater than $5,000 AND the variance percentage is equal to or greater than 10% will an explanation be required.
A variance report excel template can be found on the MAA website under Forms/Templates.
| Budget | Actual | Diff | % | Material | Reason |
|---|---|---|---|---|---|
|
10,000 |
7,500 |
2,500 |
25.0% |
No |
<5000 |
|
10,000 |
2,500 |
7,500 |
75.0% |
Yes |
>5000 & >10% |
|
25,000 |
21,000 |
4,000 |
16.0% |
No |
<5000 |
|
25,000 |
19,000 |
6,000 |
24.0% |
Yes |
>5000 & >10% |
|
50,000 |
54,000 |
(4,000) |
-8.0% |
No |
>5000 & >10% |
|
50,000 |
43,000 |
7,000 |
14.0% |
Yes |
>5000 & >10% |
|
75,000 |
69,000 |
6,000 |
8.0% |
No |
<10% |
|
75,000 |
81,000 |
(6,000) |
-8.0% |
Yes |
<10% |
|
100,000 |
91,000 |
9,000 |
9.0% |
Yes |
<10% |
|
100,000 |
89,000 |
11,000 |
11.0% |
Yes |
>5000 & >10% |