On this page: 9.Prepare a short write-up regarding your final budget. What categ
ID: 375346 • Letter: O
Question
On this page: 9.Prepare a short write-up regarding your final budget. What categories did you find the most challenging to budget for?10. Assume that the Chief Financial Officer has informed you that next year, there will only be $450,000 of incoming revenue. Discuss how you will handle this. What operating expense categories could be reduced in total cost or could be eliminated altogether? 1. Revenues per month are equal and every month the proportion of revenue from each source is also the same. 2. Salaries to be constant at 20000 per month 3. Contract labor keeps changing and thus its' expenses We have prepared the budget with estimates such that we never go over-budget and also the total expenses each month equals our revenues. Clearly Contract labor is most difficult to budget as we do not have an equal number of patients visiting us every month thus we have to vary our contract labor and its' expenses to match the demand. Next year we have the total budget short by $50,000 and hence we need to do cost cutting to match the same. We would cut the training for a year to achieve major part of this goal. an Feb Mar Apr May Jun Jul Aug Sep OtDTotal annua 3 Revenues 41666.67 41666.667 41666.67 41666.67 41666.67 41666.67 41666.67 41666.67 41666.67 41666.67 41666.67 41666.67 500000 40% 16666.67 16666.67 16666.67 1666667 16666.67 16666.67 16666.67 16666.67 16666.67 16666.67 16666.67 16666.67 15% 625000 6250.00 6250 6250 6250 6250 6250 6250 6250 6250 6250 6250 20% 8333.33 8333.33 8333.333 8333.333 8333.333 8333.333 8333.333 8333.333 8333.333 8333.333 8333.333 8333.333 15% 6250.00 6250.00 6250 6250 6250 6250 6250 6250 6250 6250 6250 6250 556 2083.33 2083.33 2083.333 2083.333 2083.333 2083.333 2083.333 2083.333 2083.333 2083.333 2083.333 208.333 5% 2083.33 2083.33 2083.333 2083. 333 2083.333 2083.333 2083.333 2083.333 2083.333 2083.333 2083.333 2083.333 5 Medicare 6 Mdicaid HMO 8 PPO 9 Tricare 10 Cash 11 Total revenue 13 Operating expensers 15 Salaries 16 Contract labour 17 fringe benefits 18 Employee training 19 Dus and subscriptions 20 Supplies and Pharma 21 Depreciation 22 Housekeeping 23 Malpractice 24 Utilities 5 Misc 26 Total expenses 000 20000 200 20000 20000 20000 20000 20000 20000 20000 20000 20000 0008000 70005000600 000 5000 40100 5000 5000 5000 0002000 100201000 2 1000 20 1000 200 1000 2000 2000 3000200 00 20 30000 20 0 000 3000 2000 1100 500 500 500 5007007000011001100 0006000 6000 60006600 6000 3000 000 3000 2000 10001000101010 11500 1000 1000 1000 1000 1000 2000 2000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 800 80080088 800 00500 9600 366.67 366.67 366.67 366.67 1366.67 166.67 66.67 1166.67 166.67 2766.673766.67 3766.67
Explanation / Answer
Answer (9)
Budget – Budget is defined as the fund of the organization which is used for funding all activities in the organization.
Budget planning is carried out for every operating year of the organization so that adequate fund is available for execution of each identified objectives of the organization for that year. In an organization, the budget is planned for all the key annual objectives of the organization. So this budget is a financial source for achieving these objectives. The budget allocation to each objective ensures the financial support for executing the object with respect to its target timeline so that goal of the organization can be achieved. So allotting the budget and using the budget for the achieving objective is monitored and this is termed as the performance of the organization based on the progress of the each objective.
Budget is planned for all the key objectives of the organization along with the functional expenses for each function. So the budget to be planned for each department of the organization like Manufacturing, Quality, Material, Sales, Marketing, Engineering, IT, HR, Supply Chain etc.
Final Budget - Each department has to work out their expense for the next year which includes capital and non-capital both type of expense heads.Final budget of the organization is drafted by finance team with inputs from all departments. This draft is reviewed by the management team and finally the management team approved the final budget for the organization.
The final budget contains
Challenging categories for the Budget –
The budget planning is simple if we have the clear visibility of the expenses for the organization. But many times it happens that we do not have clear visibility for the upcoming expenses of the organization. This creates the challenges for the budget process. Few of the critical factors are as below
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