Reference no: EM1339258

Application: Developing a Budget

When developing a budget, what variables do you have to take into account? In health care organizations, two of the largest groups of factors that you must consider are first, volume, and second, staffing and supply. The number of patients and tests performed each day, as well as employees and their pay rates are all crucial pieces of information when determining a budget.

In this Assignment, you will be given two budgeting scenarios: one focusing on volume and the other focusing on staffing and supplies. Based on the information within the scenarios, you will use Excel to create two different budgets.

Note: Require to perform calculations you must:

• Create an Excel spreadsheet containing the information provided (Templates are provided below in Word..will need to convert to Excel).

• Show all your work (formulas in cell).

• Answer any questions included with the problems (as text in the Excel spreadsheet).

For those not comfortable with the use of Microsoft Excel, this week's Optional Resources suggest several tutorials.

To prepare:

• Review the information in this week's Learning Resources (including the Media) dealing with both volume budgets and staffing and supply budgets, what is included in each, and how they vary from each other.

• Carefully examine the information in each of the scenarios below and consider how calculations using this information can be used to answer the questions asked.

This Assignment will be due by Day 7 of this week. Be sure and include all of your calculations.

Volume Budget Scenario
You manage lab services in a large hospital. You have the following data on both the hospital's budgeted patient days and visits for budget year 20XX along with the ratio of lab tests to patient days or visits.

	2 North Bldg.	2 South Bldg.	ICU	OPD
Patient Days/Visits Budget	19,800	21,900	8,760	200,000
Chemistry*	3.6	4.3	2.9	4.0
Hematology	1.2	2.1	1.4	3.5
Bacteriology*	3.2	5.6	3.6	5.5

 Question: Based on this data, how many lab tests would you anticipate for the coming budget year? If each test is priced at $20.00, how much gross revenue would you budget? Assuming each full-time lab technician (FTE) can perform 200,000 tests each year, how many full-time lab technicians would you plan for?

Templates

*Example: 2 North Bldg calculated.  You will need to complete 2 South Bldg, ICU and OPD

RAW DATA	2 North Bldg	2 South Bldg	ICU	OPD
Patient Days/Visits Budget	19800
Chemistry	3.6
Hematology	1.2
Bacteriology	3.2
Cost per test	20
Tests per FTE	200,000

 

TEST COUNT BUDGET	2 North Bldg	2 South Bldg	ICU	OPD	Total
Chemistry	71280	0	0	0
Hematology	23760	0	0	0
Bacteriology	63360	0	0	0
Total	158400	0	0	0

 

GROSS REVENUE BUDGET	2 North Bldg	2 South Bldg	ICU	OPD	Total
Chemistry	$1,425,600.00
Hematology	$475,200.00
Bacteriology	$1,267,200.00
Total	$3,168,000.00

 

Staffing FTE Budget	Preliminary	Final
Chemistry	4.95427	5 FTEs
Hematology
Bacteriology
Total

 

Staffing and Supply Budget Scenario

Calculate the supplies budget necessary to operate your unit for the fiscal year beginning January 1, 20X8. It is your expectation that you will perform 24,820 procedures in the budget year. The following spending data is available for the period January 1 to March 31, 20X7 during which time procedure volume amounted to 3,240. Items marked (F) are considered fixed, those marked (V) are considered variable. Inflation is planned at 4%.

Expense Item	Amount
Billing Supplies (F) IV Solutions (V) Med/Surg Supplies (V) Miscellaneous (F) Office Supplies (F) Stock Drugs (V)	$24,400 288,108 411,480 18,400 42,650 570,240

 

In reviewing performance to date, you note that in January, you purchased $150,000 of D5W fluid replacement charged to IV solutions, which represents an entire year's supply. In addition, you returned $2,800 of office supplies for credit from the vendor in February. These supplies were purchased in a previous fiscal year.

 

Expense Account	Orig. Base Period Amt	Adjustments	Adjusted Base Period Amt	Base Period Units (Vol or Time)	Amount/Unit	Budget Period Units (Vol or Time)	Base Amt. Budget	Inflation Rate	Inflation Amt	Final Budget Amt
Billing Supplies (F)				3		12		4%
IV Solutions (V)		$(112,500.00)		3240		24820		4%
Med/Surg Supplies (V)				3240		24820		4%
Misc. (F)				3		12		4%
Office Supplies (F)		$2,800.00		3		12		4%
Stock Drugs (V)				3240		24820		4%
Total

You also need to prepare the salary budget for the same fiscal year. You have determined that staff needs are for 6.5 FTEs. The following are the current staff with FTE values and hourly rates of pay as of January 1, 20X8:

Position / Incumbent	FTE Value	Pay Rate
Hardy	1.0	$16.30
Rosetti	0.5	16.80
Chang	0.5	16.50
Martinez	1.0	16.00
Jones	0.5	16.75

A pay raise will be given to all staff on October 1st of each year at a rate of 8 percent. In making your calculations, always round to the nearest whole dollar for annual salary amounts, but keep pennies in the hourly pay rates. New staff begins the new fiscal year at $16.00 per hour.

This Assignment will be due by Day 7 of this week. Be sure and include all of your calculations.

Incumbent	FTE Value	Jan 1 20X8	Base Budget Amt	Salary Increase%	Months of Increase	Increase Amt	Salary Budget
Hardy
Rosetti
Chang
Martinez
Jones
Vacant
Total