When developing a budget, what variables do you have to take into account

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: For those Assignments in this course that require you 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:

• 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.
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

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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 perc