Budget Managment Analysis
Budget Management AnalysisFinancial Resource Management/HCS571Budget Management Analysis A budget is a top priority to any organization. Basically, a budget is the financial blueprint for an organization. A budget management analysis is used by managers as a tool. This tool allows managers to make sure the required resources are obtained and in place, and also, that these resources are used efficiently and correctly in an effort to help an organization achieve its goals and objectives. Budgets are determined annually and are usually based uponthe previous year’s budget, variances, and economical factors. There are always variances in relation to a budget. These variances could be due to numerous situations such as a nursing shortage. This paper will discuss some specific strategies used to manage a budget within forecasts. This paper will also discuss five expense results with budget expectations and possiblereasons for variance. And, lastly, recommend three benchmarking techniques that may improvebudget accuracy. Cost variance is the amount of money actually spent on a specific expense compared to
the actual budgeted amount for a certain period of time. To calculate a cost variance, one must subtract the actual expense from the budgeted cost of a specific item. “Cost variance analysisis a great potential importance to the health care industry” (Cleverley and Cameron, 2007). Asystem of setting standard used in the budgeting process and a related system of cost accounting are required to use a cost analysis. Cost variances are able to signal a potential or actual problemexists in an organization. It can also point to a possible cause. Cost variance analysis allows management to explain why actual expense costs differ from the budgeted values. Cost variance analysis is a part of an organization cost-control process. Florida Hospital North Pinellas (FHNP) is continually working to manage its operationsresponsibly when it comes to finance. The management team at FHNP uses sound businesspractices and careful planning in attempt to maintain a financially sound organization and to provide the community with healthcare needs. Effective financial control and planning is