BUDGETING &

MANAGING
RESOURCES
BY:
Michelle Beth Jealuvie V. Am-is
Carmelie J. Bairoy
Ellen Grace C. Baroy
Section I2
 THE CAPITAL BUDGET

is an important component of the plan to meet the

organization’s long-term goals.
TIMETABLE FOR THE BUDGETING PROCESS
budgeting process takes 3 to 6 months

process begins with the first-level manager

Each subsequent manager evaluates the budget proposal,

making adjustments as needed.

The final step in the process is approval by a governing board.

the budget process timetable is structured so that the budget is

approved a few months before the beginning of the new fiscal
year
MONITORING BUDGETARY PERFORMANCE

Variance Analysis

To determine when a variance is favorable or unfavorable, it is

important to relate the variance to its impact on the organization in
terms of revenues and expenses. If more earnings came in than
expected, the variance is favorable; if less, the variance is negative.
Likewise, if less was spent than expected, the variance is favorable;
if more was spent, the variance is negative (Sullivan, 2005).
MEDICAL/SURGICAL SUPPLIES

Budgeted expenditures Actual expenditures Variance Percent

$ 34, 560 $ 36, 958 $2, 398 6.9%

$ 2, 398
= 0.69
$ 34, 560

0.069 x 100 = 6.9% over budget

 Salary Variances
 With salary expenditures, variances may occur in volume, efficiency, or rate.
 Volume variances result when there is a difference in the budgeted and
actual workload requirements

Efficiency Variance
 also called quantity or use variance
 reflects the difference between budgeted and actual nursing care hours
provided

Rate Variances
 also known as price or spending variance
 reflect the difference in budgeted and actual hourly rates paid
 Nonsalary Expenditure Variances
may be due to changes in patient volume, patient mix, supply quantities, or
prices paid.

Position Control
 It is used to compare actual numbers of employees to the number of
budgeted FTEs for the nursing unit
It is a list of approved, budgeted FTE positions for the nursing cost
center.
Staff Impact On Budgetary Performance
Staff can acutely affect the organization’s finances. Misuse of sick time,
excessive overtime or turnover, and wasteful use of resources can result
in negative variance.
 FUTURE TRENDS

A major trend in financial management of health care organizations is the

shift from revenue-based to a cost-based accounting system.
 REFERENCES:
BOOKS
• Sullivan, E. J. & Decker, P. J. (2005). Effective leadership and management in nursing. 6th ed.
New jersey: Prentice Hall Inc.
• Huber, D. (2000). Leadership and nursing care management. 2nd ed. Philadelphia: W. B.
Saunders Company.
• Kelly, P. & Crawford, H. (2008). Nursing leadership and management. 1st ed. Ontario: Thomson
Delmar Learning.
• Marquis, B. L. & Huston, C. J. (2009). Leadership roles and management functions in nursing.
6th ed. Philadelphia: Lippimcott Williams and Wilkins.

JOURNALS
• Clark, J. J. (2005). Improving hospital budgeting and accountability: a best practice approach: if
your organization is struggling to achieve its budget targets, your budget process itself may be
the culprit. It may also hold the solution.
http://findarticles.com/p/articles/mi_m3257/is_7_59/ai_n14817852/. Retrieved: December 3,
2009.

• Cappettini, R., Chow, C. W., & Williamson, J. E. (1990). Breakdown approach helps managers
select projects - hospital capital budget.http://findarticles.com
/p/articles/mi_m3257/is_n11_v44/ai_9074878/.Retrieved: December 3, 2009.