Budget Management and Variance Analysis Essay

1742 Words Oct 10th, 2012 7 Pages
Budget Management and Variance
Olga Garcia
NCS/571 - Financial Resource Management
October 1, 2012
Theresa Pichelmeyer

Budget Management and Variance A budget is a tool that helps managers to ensure that the required resources are obtained and used effectively and efficiently as the organization moves towards achievement of its objectives. The budgets are determined yearly and are based upon the previous year’s budget and variances. This paper will discuss a development of operating budget, comparison expense results with budget expectations, description of possible reasons for variances and strategies to keep results aligned with expectations, recommendation some benchmarking techniques that might improve budget
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While analyzing the nursing expense results from various units for a pay period, there were some favorable and unfavorable variances. While reviewing the expense record the paid productive hour’s variance was within the budget and the paid nonproductive hour’s variance was 60 hours over the budgeted hours. The unfavorable variance of paid nonproductive hours may have occurred due to some staff being on modified duty, sick leave, meeting time, or education time, which means they are getting paid with no patient care involved. The overtime percentage of hour’s variance was 7.5% over the budget and the registry percentage of hour’s variance was 8.0% over the budget, both are unfavorable. The overtime may have been caused by bad time management, late arrival of the next shift, or working past shift hours due to not enough staff. The increase in the registry hours may have been due to not enough regular staff due to hiring freeze or staff being off for personal or illness reasons. The hours per patient day (HPPD) licensed productive hours was .13 over budget, the direct product hours was within budget, and the total productive hours was within budget. The hours per patient day over budget may have been caused by the unit being over staffed or also due to the overtime and registry hours. The average daily census (ADC) per unit varied from being within budget to 7.50 over the budget. The daily census is very unpredictable and depends on the time of year,

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