Discuss decision-making processes in creating a budget. Explain the role of vari

Question

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 management and the annual cost increase of each. The first alternative shows an 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) The second alternative shows an 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

Answer:

Creating, monitoring and managing a budget is key to business success. It should help you allocate resources where they are needed, so that your business remains profitable and successful. It need not be complicated. You simply need to work out what you are likely to earn and spend in the budget period.

Begin by asking these questions:

Variance analysis is important to assist with managing budgets by controlling budgeted versus actual costs. In program and project management, for example, financial data are generally assessed at key intervals or milestones. For instance, a monthly closing report might provide quantitative data about expenses, revenue and remaining inventory levels. Variances between planned and actual costs might lead to adjusting business goals, objectives or strategies.

Answer: Managerial accounting is concerned with providing information to managers, and an example is people inside an organization who direct and control its operations. Managerial accounting provides the essential data with which organizations are actually run

Financial accounting is concerned with providing information to stockholders, creditors, and others who are outside an organization. Financial accounting provides the scorecard by which a company’s past performance is judged.

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