Determine the total variance between the planned and actual budgets for Surgical Volume. Is the variance favorable or unfavorable?
The work should be done in excel
Attached all instructions
Requirements: | .xls file
Week 9: Budgeting and Variance Analysis And Loan Repayment
In order for organizations to achieve their missions, they need to create plans and execute them effectively. Budgeting is the process that organizations use to develop the detailed financial plans for the future that will allow them to achieve their goals.
Essentially, a budget is an educated guess, and regardless of how great the effort an organization makes to create a realistic budget, actual results typically differ from the budget. In some cases, factors beyond the control of the organization’s managers create the differences. In other cases, differences between the budget and the actual results may be indicative of serious management problems and out-of-control processes.
This week, as you examine the budgeting process, you explore working capital of health care businesses. You also create an operating budget and conduct variance analysis.
Learning Objectives
Students will:
Analyze the working capital of health care organizations
Evaluate the impact of regulations, business plans, and economic dynamics on working capital requirements of health care businesses
Analyze operating budgets for variances
Learning Resources
Note: To access this week’s required library resources, please click on the link to the Course Readings List, found in theCourse Materials section of your Syllabus.
Required Readings
Zelman, W. N., McCue, M. J., Glick, N. D., & Thomas, M. S. (2014). Financial management of health care organizations: An introduction to fundamental tools, concepts and applications (4th ed.). San Francisco, CA: Jossey-Bass.
Chapter 5, “Working Capital Management” (pp. 209–243)
Chapter 10, “Budgeting” (pp. 465–493)
Chapter 11, “Responsibility Accounting” (pp. 521–544)
Chapter 12, “Provider Cost-Finding Methods” (pp. 551–571)
Esquibell, T., & Spivey, K. (2015, 01). Budgeting best practices. Health Facilities Management, 28(1), 22–25.
Note:Retrieved from the Walden Library databases.
Mitton, C., Dionne, F., & Donaldson, C. (2014). Managing healthcare budgets in times of austerity: The role of program budgeting and marginal analysis. Applied Health Economics and Health Policy, 12(2), 95–102.
Note:Retrieved from the Walden Library databases.
Ontario Hospital Association. (2019). Budget and operating plan 2019-2020. Retrieved from https://www.oha.com/Documents/2019-2020%20Budget%20and%20Operating%20Plan.pdf
Peavler, R. (n.d.). Example of a Financial Budget for a Small Business. Retrieved from http://bizfinance.about.com/od/typesofbudgets/a/budgeting-how-to-do-financial-budget-for-small-business.htm
Microsoft, Inc. (2016). Excel Training. Retrieved from https://support.office.com/en-us/article/Excel-training-9bc05390-e94c-46af-a5b3-d7c22f6990bb?ui=en-US&rs=en-US&ad=US
Microsoft, Inc. (2015b). Excel 2010 videos and tutorials. Retrieved from https://support.office.com/en-US/article/Excel-2010-training-courses-videos-and-tutorials-807211fe-ee81-4887-b48a-68a94e1e912f
Microsoft, Inc. (2015c). Excel 2013 videos and tutorials. Retrieved from https://support.office.com/en-us/article/Excel-2013-training-courses-videos-and-tutorials-aaae974d-3f47-41d9-895e-97a71c2e8a4a?ui=en-US&rs=en-US&ad=US
Excel Easy. (2016, March 8). Financial Functions. Retrieved from http://www.excel-easy.com/functions/financial-functions.html
Document: Week 9 Assignment Budget and Variance Excel Template (Excel spreadsheet)
Required Media
Mikhailenko, V. (2013). Tutorial—How to create annual budget with Microsoft Excel to balance income and expenses [Video file]. Retrieved September 13, 2015, from https://www.youtube.com/watch?v=dEvJlzS9C4Q
Note: The approximate length of this media piece is 15 minutes.
Optional Resources
Excel Finance Class 01: Intro To Excel 2007 & 2010 [Video file]. Retrieved March 8, 2016, from https://www.youtube.com/watch?v=qeWOy4Q-1n8&noredirect=1
Provides a tutorial of Excel, basic math functions, and about how to perform calculations. There are videos in a series and the link will take you to the first in the series which is “The Basics”.
Discussion: Working Capital
Note: This is a Post First assignment. You are required to post your original post before the discussion board opens for your review.
Working capital, or actual cash available for spending, is the key to a successful organization. In a health care organization, it is important to determine how much cash is available to run the day-to-day operations. For this Discussion, you analyze the working capital of a health care organization of your choice.
To prepare for this Discussion:
Locate and select financial statements for a particular health care organization. Analyze the working capital of the organization.
Consider the impact of regulations, business plans, and economic dynamics on the working capital requirements of the business. Is there sufficient working capital for business operations of the organization you selected?
By Day 3
Post a cohesive response to the following:
Analyze the working capital of the health care organization you selected. Evaluate the impact of regulations, business plans, and economic dynamics on the working capital requirements of the business. Include whether or not there is sufficient working capital for business operations and explain why.
Support your response by identifying and explaining key points and/or examples presented in the Learning Resources.
Assignment: Budgeting and Variance Analysis
Note: The Instructor will post the document for this Assignment by Day 1 of Week 9.
Budgeting is an important activity within every health care organization. The particular challenges encountered, however, can vary depending on the type of organization. A state or federally funded organization, for example, will likely have a budget that is allocated to it, and it needs to follow specific guidelines on how the money can be used. A for-profit organization, by contrast, will typically have more influence and flexibility in setting up its budget and making choices on matters such as how much to spend on marketing, patient care, or incentives for employees.
In addition to preparing budgets, as a health care administrator, you must also be able to evaluate whether or not you have achieved your budget using variance analysis. This is important because variance analysis measures the differences between the budget and actual results, and provides administrators with a starting point for correcting financial performance. For this Assignment, you conduct a variance analysis for a health care organization.
To prepare for this Assignment:
Review the Week 9 Assignment document provided to you by the Instructor. Examine the budgeted and actual revenues and expenses for a hospital. Reflect on concepts of budgeting and variance. Refer to Chapter 10 and Chapter 11 of Financial Management of Health Care Organizations: An Introduction to Fundamental Tools, Concepts and Applications in this week’s Learning Resources for additional guidance.
The Assignment:
Using the address the following:
Determine the total variance between the planned and actual budgets for Surgical Volume. Is the variance favorable or unfavorable?
Determine the total variance between the planned and actual budgets for Patient Days. Is the variance favorable or unfavorable?
Determine the service-related variance for Surgical Volume.
Determine the service-related variance for Patient Days.
Prepare a flexible budget estimate. Present a side-by-side budget, flexible budget estimate, and the actual Surgical Revenues.
Prepare a flexible budget estimate. Present a side-by-side budget, flexible budget estimate, and the actual Patient Expenses.
Determine what variances are due to change in volume and what variances are due to change in rates.
PART II
Q3. Chapter 11 – Capital Budgeting – Time Value of Money
Capital budgeting is the corporate investment decision. Just as individuals must decide what financial assets to invest in (stocks, bonds, etc), companies must decide what business assets to invest in (for example: property, plant & equipment; employee training; research & development; brand name development). In both cases, investments are evaluated in terms of the risk and return (yield) trade-off.
Time value of money is used in evaluating capital budgeting projects – Finkler provides a review (114-121) using Excel spreadsheet functions. Complete the review exercise, using the Excel template “.” First, find the monthly payments on a $20,000, 6%, 3-year car loan.
Assume the loan is taken out on December 31, 2018. Row 5 in the spreadsheet is now complete for the first monthly payment. To complete the loan repayment schedule, copy and paste row 5 to create a 36 payment schedule. The loan balance at the end of the 36th payment should equal zero.
Upload your completed schedule.
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