The operating or 5 year plan is ....
how we expect to meet our objectives
how we expected to get rid of of what we are doing
to go onto a 3 years plan
The planning process takes...
less than the year
more than the year
randomly throughout the year
more or less continuously throughout the year
The plan is most detailed for the ___ year
Managerial accounting is ___ year only
Budgets are ... plans, expressed in .... terms....that specify how resources will be used over some period of time
long period of times
Budgets may be developed and applied to any ___ within an organization
by service line
by the nature of the ___
by no contract
To be effective, budget must not be thought of as financial tools, but rather as
highly financial tools
Budgets are used for: planning, communication, control
all organizations use ____ budgets to set standards for the coming year
most use quarterly budgets to ensure timely feedback and control
Not all budgets types have to follow the same timing pattern.
Out year budgets are more for ___ than for ____ purposes
-begin at sub-unit ( __ ) level
are reviewed and compiled by the finance department
are reviewed and compiled by the lower level department
are not approved by senior management
are approved by senior management
Top down budgets:
-begin at the ___ department with ____ management guidance
-they are sent to the departments for __ ?
advantages of bottom-up and top-down budgets
bottom up are usually more accurate in the detailed tasks
organizations can use both top-down and bottom-up budgeting
the budgeting technique that is most likely to motivate managers is....bottom up budgeting is the best way of motivating managers to meet
the major disadvantage of a budget produced by top down process is....
budget provide a means for coordinating the plans of all organization subunits. thus, budgets are a way to ''promote goal congruence''
this lack of participation may impair the coordination of objectives of subunits with those of the organization (goal congruence)
lower level managers will tend not to have an understanding and support for the top down budget
a problem with bottom up budgeting is .... = individual team members overstate their budget needs
___ budget is the ___ budget that develops the ___ data needed for the other budgets
statistics budget, foundation budget, input data
rhetoric budget, financial budget, output data
Important: a static budget is a budget that does not change as volume changes.
statistics budget contains the basic forecasts for:
volume of services provided
no volume provided
resources ( such as no labor and capital) needed to provide those services
resources ( such as labor and capital) needed to provide those services
smaller organizations do not have one at all.
smaller organizations may not have one.
''revenue budget'' combines with volume data from the statistics budget with reimbursement expectations to ___ revenues
get rid of revenues
the end result is a revenue forecast when it comes to revenue budget
in the aggregate
by no service
expense budget combines volume data from the statistics budget with detailed resource utilization data to forecast expenses
1. to be most useful, expenses must be broke down into ___ and ___ components.
2. like revenues, expenses must be forecasted at ____ levels
1. fixed and variable components
1. fixed and no variable components
2 . one
at larger organizations, each category will have a separate budget
for larger organizations, the _____ budget, focuses on _______ profitibiality, combines information from the ___ and expense budgets
small organizations may use a single operating budget in place of multiple budget types
Operating budget example, budget is divided into four parts.
fixed cost assumptions
variance analysis is so useful to health service managers
in variance analysis, there are 3 types of data used.
1. static budget, which is the ___ budget, unadjusted for realized volume
2. the realized, or actual, data reflects _____ results
3. a flexible budget is one that has been ___ to reflect realized volume, using ___ assumption
2 before the fact results
2 after the fact results
3 adjusted, initial
3 unadjusted, initial
An initial budget — known as a "static" budget
flexible budget useful in variance analysis
if the number of enrollees had changed a __________ flexible budget would be required
costs are based on ___ volume applied to ____ assumptions
profit variance = ___ - ____
actual revenues - static revenues
static costs - actual costs
actual profit - static profit
profit variance = actual profit - static profit ap - sp
revenue variance = actual revenues - static revenues ar - sr
cost variance = static cost - actual costs sc - ac
variance are defined such that a negative (-) variance is ____
''variance analysis'' is applied to operating data such as ''census, labor hours, number of outpatient visits, and so on ''
often on a weekly (or even daily) basis