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.
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2 North Bldg.
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2 South Bldg.
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ICU
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OPD
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Patient Days/Visits Budget
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19,800
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21,900
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8,760
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200,000
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Chemistry*
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3.6
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4.3
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2.9
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4.0
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Hematology
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1.2
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2.1
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1.4
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3.5
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Bacteriology*
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3.2
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5.6
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3.6
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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
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RAW DATA
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2 North Bldg
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2 South Bldg
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ICU
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OPD
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Patient Days/Visits Budget
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19800
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Chemistry
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3.6
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Hematology
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1.2
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Bacteriology
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3.2
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Cost per test
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20
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Tests per FTE
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200,000
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TEST COUNT BUDGET
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2 North Bldg
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2 South Bldg
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ICU
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OPD
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Total
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Chemistry
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71280
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0
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0
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0
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Hematology
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23760
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0
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0
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0
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Bacteriology
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63360
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0
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0
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0
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Total
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158400
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0
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0
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0
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GROSS REVENUE BUDGET
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2 North Bldg
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2 South Bldg
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ICU
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OPD
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Total
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Chemistry
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$1,425,600.00
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Hematology
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$475,200.00
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Bacteriology
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$1,267,200.00
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Total
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$3,168,000.00
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Staffing FTE Budget
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Preliminary
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Final
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Chemistry
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4.95427
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5 FTEs
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Hematology
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Bacteriology
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Total
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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%.
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Expense Item
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Amount
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Billing Supplies (F)
IV Solutions (V)
Med/Surg Supplies (V) Miscellaneous (F)
Office Supplies (F)
Stock Drugs (V)
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$24,400
288,108
411,480
18,400
42,650
570,240
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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 $2,800 of office supplies for credit from the vendor in February. These supplies were purchased in a previous fiscal year.
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Expense Account
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Orig. Base Period Amt
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Adjustments
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Adjusted Base Period Amt
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Base Period Units (Vol or Time)
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Amount/Unit
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Budget Period Units (Vol or Time)
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Base Amt. Budget
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Inflation Rate
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Inflation Amt
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Final Budget Amt
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Billing Supplies (F)
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3
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12
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4%
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IV Solutions (V)
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$(112,500.00)
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3240
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24820
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4%
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Med/Surg Supplies (V)
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3240
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24820
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4%
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Misc. (F)
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3
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12
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4%
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Office Supplies (F)
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$2,800.00
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3
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12
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4%
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Stock Drugs (V)
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3240
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24820
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4%
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Total
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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:
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Position / Incumbent
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FTE Value
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Pay Rate
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Hardy
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1.0
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$16.30
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Rosetti
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0.5
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16.80
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Chang
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0.5
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16.50
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Martinez
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1.0
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16.00
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Jones
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0.5
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16.75
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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.
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Incumbent
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FTE Value
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Jan 1 20X8
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Base Budget Amt
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Salary Increase%
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Months of Increase
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Increase Amt
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Salary Budget
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Hardy
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Rosetti
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Chang
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Martinez
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Jones
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Vacant
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Total
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