Budget Managment Analysis

Budget Management Analysis

Financial Resource Management/HCS571

Budget 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 upon

the 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 possible

reasons for variance.  And, lastly, recommend three benchmarking techniques that may improve

budget 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 analysis

is a great potential importance to the health care industry” (Cleverley and Cameron, 2007).  A

system 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 problem

exists 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 operations

responsibly when it comes to finance.  The management team at FHNP uses sound business

practices 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