This website uses cookies to ensure you have the best experience. Learn more

Budget Management Essay

1311 words - 6 pages

Budget Management Analysis

Budget Management Analysis
Budgets are used in many organizations to plan the fiscal year of the institutions. Preparing a budget helps to allocate the available funds of each department within the company. Creating a budget is a vital tool in keeping the financial status in order, focusing on all the cost over a select period of time to achieve financial stability. Budgeting involves forecasting the demand for resources that create variable cost or flexible cost. Chief financial officers of the organizations are in charge of creating the budget through forecasting. Not having a budget can be catastrophic for any organization.
There are many types of budgets. ...view middle of the document...

This tactic also drives an individual toward the establishment of effective monetary policy”. (Deschamps, 2004, p. 648).
The second strategy is to adopt policies and principles toward to limit the debits of the institution that are not essential to the functioning of the business. Good management needs to be able to cut expenses in order to establish a solid financial statement for the institution. Business needs to operate with the basic needs, what is not a needed, should be saved and should be allocated on others cost of the facility. One way of reaching a financial goal is reducing expenses and increasing productivity through effectively controlling costs.
Budget analysis is an important aspect of budgeting. Examination of the expenses and analyzing the financial data of the business is a fundamental part in a budget. Financial date provides useful information that health care leaders utilize to project the future finance of the organization. Analyzing the two years data, a variance or a difference is obtained which, helps to identify each expense. Managers can utilize the variance data to determine the reasons why each expense has increase or decrease in order to forecast future budgets.

Budget expenses | 1st Year | 2nd Year | Variance |
Salaries and wages | $650,000 | $655,600 | $5,600 |
Professional fees | $25,000 | $22,000 | $3,000 |
Tuition | $5,000 | $3,000 | $2,000 |
Benefits | $15,000 | $13,000 | $2,000 |
Supplies | $13,000 | $16,000 | $3,000 |

Management by exception is the practice of examining the financial and operational results of a business, and only bringing issues to the attention of management if results represent substantial differences from the budgeted or expected amount. For example, the company controller may be required to notify management of those expenses that are the greater of $10,000 or 20% higher than expected. The purpose of the management by exception concept is to only bother management with the most important variances from the planned direction or results of the business. Managers will presumably spend more time attending to and correcting these larger variances. The concept can be fine-tuned, so that smaller variances are brought to the attention of lower-level managers, while a massive variance is reported straight to senior management ("What is management by exception? - Questions & Answers - AccountingTools", n.d., p. 1).
Analyzing the two years data, it was found an increase in salaries of $5,600 in the second year. This increment could be the result of decrease of LPN through the institution. Now the hospital is not hiring any more LPN’s. An LPN will cost $10,000 less than a RN per year. Benefits showed a decrease of $2,000, since JHS Health Care Plan monopolized the health care of the institution, so it was possible to decrease the cost. The tuition reimbursement showed a decrease of $2,000 dollars for the second year since the institution is not given the $2,000 bonus once...

Other Papers Like Budget Management

Flexible Budget Essay

1139 words - 5 pages Flexible Budget ACC 543 June 20, 2011 Flexible Budget In today’s business, a flexible budget helps plan for the future. This tool compiles expense, revenue, production, and cost data. The data produced from the flexible budget provides an organization with a tool for performance evaluation. This can assist management in determining the most profitable sales and production levels, in addition to determining fixed and variable

Flexable Budget Essay

1146 words - 5 pages budgeting, however, one can break down the year budget into quarterly or monthly capabilities. Webster (2004), states that, “this practice makes it possible for management to monitor progress during the year.” Then one can correct the process if need to be due to variances in meeting the set goals. Also, flexible budgeting can adjust any variances back to standard as actual prices are known to not match with the production standards

Budget Analysis

1391 words - 6 pages Budget Management Analysis for the Post Anesthesia Care Unit The budget management process is not an easy task. It is time consuming and difficult. There are some ways to overcome the challenge of managing budgets within forecasts. One way is to budget and report beyond the ledger. Data should be looked at beyond the company’s financial system. This will allow the company to create more accurate forecasts. Next the budget software should be

Master Budget

2064 words - 9 pages CHAPTER 6 MASTER BUDGET AND RESPONSIBILITY ACCOUNTING I. LEARNING OBJECTIVES 1. Describe what the master budget is and explain its benefits 2. Describe the advantages of budgets 3. Prepare the operating budget and its supporting schedules 4. Use computer-based financial planning models in sensitivity analysis 5. Explain kaizen budgeting and how it is used for cost management 6. Prepare an activity-based budget

Budget Change

670 words - 3 pages Budget Changes Budget Changes HCS 405 May 20, 2013 Budget Changes How might financial managers budget for unforeseen changes and improvements in information technology that require large capital outlays? A financial manager

Budget Guidelines

1860 words - 8 pages their organization. Following each financial review, the allocation letters are revised to accurately reflect the changes in assumptions and any other items that were agreed upon during the financial review. Information to Start Your Budget or Forecast Before beginning a budget or forecast, it is important to have a knowledge of the organization or business, including its current financial status. Input from department management, principal

Flexible Budget

3607 words - 15 pages the rate from the base year. The resulting flexible budget for 2011 is 25,200 units of CO2 (2 units 12,600 liters). This means that if there is no change in efficiency, 25,200 units of CO2 are expected to be emitted at the higher level of activity. The company then compares the actual amount of CO2 emitted during 2011—let’s say 20,300 units—to the flexible budget amount of 25,200 units. As management accountants, we usually look at this

Budget Survey

2083 words - 9 pages , health problems service delivery/ managerial issues are also hindering the access and quality of health services to the population. The service delivery/management problems are diverse in nature, and include shortage of technical human resource, capacity issues, lack of infrastructure and equipment. * The first, most severe and very expensive burden or pandemic is that of HIV and AIDS and TB * The second is unacceptably high and I

Health Care Budget

802 words - 4 pages Health Care Budget An operating budget is a strategic initiative for the organizations financial plans over the course of the coming year. The operating budget works directly with the Statement of Activities (SOA) for a fiscal year to accomplish the organization financial goals. To produce an effective operating budget the organization needs to have knowledge of what financial management practices work best for the financial goals they are

Budget and Control

1841 words - 8 pages Addis Ababa University School of Commerce Human Resource Management Postgraduate Distance Program Budgeting and Control TMA 1 Prepared by: Lealem Tilahun Assefa ID: GSD 0099/06 Class: First Year – Third Semester – Section 2 Submitted to: Ato Mengistu Bogale August 2015 1. Introduction The word budget means the financial plan of business enterprise for the period of specific period. Predicting financial results of

Master & Flexible Budget

895 words - 4 pages levels of volume allow management to evaluate cash, labor, materials, and equipment requirements. Companies use flexible budgets for planning, evaluating cost control, and evaluating performance. Flexible budget allows cost-volume-profit analysis at various volume assumptions. Variances Variances are the difference between actual and budget amounts. These variances can be

Related Essays

Budget Management Analysis

1434 words - 6 pages Budget Management Analysis HCS/571 Financial Resource Management June 27, 2011 Dr. Lena Watson Budget Management Analysis Budget management analysis is used by mangers as a tool and helps determine that all resources available are being used efficiently. The budgets are determined yearly and are based upon the previous year’s budget and variances. This paper will discuss specific strategies to manage budgets within forecast, compare

Financial Management Of Courts Budget Essay

3507 words - 15 pages FINANCIAL MANAGEMENT OF COURTS BUDGET Programme Director, Tererai Mafukidze Members of the South African Judges Commission, Members of the Venice Commission Various Professionals and members here present, Distinguished Guests, Registrars from various parts of the world, Ladies and Gentlemen Protocol observed. I am humbled to address this auspicious gathering of the South African Judges Commission and Venice Commissions Registrar’s

Financial Management Of Courts Budget Essay

3290 words - 14 pages FINANCIAL MANAGEMENT OF COURTS BUDGET Programme Director, Tererai Mafukidze Members of the South African Judges Commission, Members of the Venice Commission Various Professionals and members here present, Distinguished Guests, Registrars from various parts of the world, Ladies and Gentlemen Protocol observed. I am humbled to address this auspicious gathering of the South African Judges Commission and Venice Commissions Registrar’s

Budget Essay

2453 words - 10 pages projected 7.2 per cent but say at 6.5 per cent which is more likely given the overall foreseeable macroeconomic context, the deficit would cross 5.0 per cent of GDP. The Public Money and Budget Management Act 2009 clearly provides directive for the government to limit the deficit at a 'tolerable' level by tactfully not defining what percentage of GDP is tolerable. The problem is that the size of deficit is about 75 per cent of the development budget