Decision Making Process Of Planning The 2010 Operating Budget

1177 Words Dec 6th, 2016 5 Pages
The Patton-Fuller Community Hospital is in the process of planning the 2010 operating budget. This paper will discuss the decision-making processes in creating a budget, the role of variance analysis in maintaining an operating budget, the differences between managerial and financial accounting, GAAP and Patton-Fuller’s operating budget, labor alternatives and the annual cost increase of each alternative, and the recommended labor alternative.
Decision-Making Processes in Creating a Budget
An important part of financial planning for any organization is creating a budget. The budget is a statement that allocates resources so that an organization 's objectives are achieved for a particular period of time. A budget is a financial plans on how an organization will spend and receive funds for a set period of time. An operating budget is a combination of identified expenses, future expected expenses, and over the course of the year expected income (Bradford, 2015). An operating budget is prepared before their accounting period, which is why the organizations estimated expenses and revenues are required (Bradford, 2015). Equally important, financial managers must consider several internal and external factors before making financial decisions. The aftermath of the recession, customer driven health care, declining Medicaid and Medicare reimbursements, and new health care reform laws are just a few factors that financial managers must consider when creating a budget (Andrews,…

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