Budget Analysis Essay

1378 Words Aug 14th, 2014 6 Pages
Budget Management Analysis for the Post Anesthesia Care Unit
The budget management process is not an easy task. It is time consuming and difficult. There are some ways to overcome the challenge of managing budgets within forecasts. One way is to budget and report beyond the ledger. Data should be looked at beyond the company’s financial system. This will allow the company to create more accurate forecasts. Next the budget software should be user-friendly. If it is easy to use, the happier the employees are to use and understand it. Thirdly, the budget should have the options to incorporate a flexible financial model. Managers should be able to input information on how their particular department relates to other departments or functions.
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Several weeks after each month ends, the accountants gather all the cost information and report the actual totals for the month. The simplest approach is to compare the total costs that the entire organization has incurred with the budgeted costs for the entire department. The difference between the amount budgeted and the amount incurred is the total department variance. This variance will be referred to as an unfavorable variance because the department spent more than had been budgeted. Accountants use the term favorable variance to indicate spending less than expected. For the sake of this assignment, I will use the variance report for my area, the PACU. We will look at the budget and variances in the areas of salaries and wages including overtime, supplies, equipment management, printing and copying, and education.
Salaries

For the month of June, the PACU was budgeted $33,859 and $520 for overtime for a total of $34,379. The actual amount spent on salaries was $52,734 and $835 for overtime for a total of $53,569. The total variance is $19,190 which is an unfavorable variance. She explained that increased staffing was used to compensate for weekend surgeries. This is the first month that the surgery department started doing elective surgeries on the weekend that led to overtime and increased on call and call back time for the nurses. The PACU nurses have to recover all the endoscopies and Cath lab patients on

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