Write a 1,050- to 1,400-word paper in which you address the following: Discuss d

Question

Write a 1,050- to 1,400-word paper in which you address the following:

Discuss decision-making processes in creating a budget.

Explain the role of variance analysis in maintaining an operating budget.

Differentiate between managerial accounting and financial management.

Explain generally accepted accounting principles applied to the health care industry and how they are applied to your Operating Budget Projection.

Discuss the decision between the two labor alternatives facing the management of PFCH and the annual cost increase of each.

1. Increase in cost per month due to a $1 raise per nursing hour Jan $ 63,702.62 Feb $ 57,517.73 Mar $ 58,973.00 Apr $ 48,820.77 May $ 43,640.71 Jun $ 34,839.80 Jul $ 35,013.05 Aug $ 51,471.44 Sep $ 53,671.66 Oct $ 55,715.97 Nov $ 64,412.93 Dec $ 62,940.33 Total $ 630,720.01

2. Increase in cost per month due to a change in nursing ratio from 5 to 1 down to 4 to 1 Jan $ 477,770 Feb $ 431,383 Mar $ 442,297 Apr $ 366,156 May $ 327,305 Jun $ 261,299 Jul $ 262,598 Aug $ 386,036 Sep $ 402,537 Oct $ 417,870 Nov $ 483,097 Dec $ 472,052 Total $ 4,730,400

Make a recommendation about which labor alternative should be chosen. Justify and analyze the labor decision that you recommend.

Your justification should present numbers related to fiscal management including how each decision affects the 2010 Budget Projection.

Analyze the effect of your decision on the operating budget, including: The opportunity cost of your recommendation.

How your recommendation affects employee satisfaction.

How your recommendation affects patient care and patient satisfaction (1400 words)

Explanation / Answer

There are various elements to decide while working on budgeting. Budget comprises of various different budgets and at every point ou need to take a decision of what is right and what is feasible. For example while doing budgeting for Sales, one should first understand the current situation, past trends, forecast the future and then should put a realistic number. If this decision is not taken rightly, this could lead to adverse results and negative results when actuals are compared to forecast or while doing a variance analysis. Same is the case when budgeting for expenses. Therefore decision making is really very important while doing budgeting.

Role of Variance:-

1. Helps to make comparisons between two or more means when applied to budgeting or management accouting.

2. Helsps decision makers to draw various results that in turn lead to improve efficiency and performance of a business entity

3. Leads to attain business objectives and goals in a way as wanted.

Difference between Financial and Management accounting are

Financial accounting has its focus on the financial statements which are distributed to stockholders, lenders, financial analysts, and others outside of the company.

Managerial accounting has its focus on providing information within the company so that its management can take timely and effective decisions and can operate the company more effectively. Managerial accounting also provide instructions on computing the cost of products at a manufacturing enterprise. These costs will then be used in the external financial statements.

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