Week 3 Dq1

DQ1

What would you consider when reviewing a budget? Under what conditions is a flexible budget more effective than a static budget? Apart from helping you to track down your expenses, budgeting also helps you to realize and attain your long and short term financial goals. Though it may not appear to be most exciting, yet you need to plan it carefully so that you can gather as much detailed information as possible. While budgeting you have to make note of your monthly income and in order to do this you should record every source of your income as well as assemble your monthly financial statements. A static budget is essentially based on a single level of operations. After a static budget has been approved and finalized, that single level of operations (volume) is never adjusted. A flexible budget is one that is created using budgeted revenue and/or budgeted cost amounts. A flexible budget is adjusted, or flexed, to the actual level of output achieved (or perhaps expected to be achieved) during the budget period. So therefore the variable or flexible budget (also called a dynamic budget), is an effective evaluative tool for a company that frequently experiences variations in sales volume that strongly affect the level of production. In these circumstances a company initially constructs a series of budgets for a range of production volumes that it can reasonably and profitably meet.

DQ2

How does understanding how costs behave assist you in managing a hospital under the Medicare prospective payment system?

DQ3

The local school system asks you to submit a proposal to do pre-employment physicals for 60 bus drivers. What financial or accounting information do you need to submit the proposal? What will you charge the school system?