Business Budgeting For Expenses Of Equipment Charges

Step-wise process for budgeting expenses for equipment charges

Describe about the Business Budgeting for Expenses of Equipment Charges.

1: The following are the various steps that are involved in the budgeting or while preparing a budget:

Gathering of all the information related with the sources and the income and the expenses. This would include the sources like the fees received from the patient. The expenses would include the rent, all the charges for the equipment’s, needles, cost of the various beds, sheets etc. to be used in the clinic. Further, the expenses would include the salary of the staff, nurses etc.

Then all the sources of income. If there is any income from any other source, then the same will have to be recorded.

Creation of the list of the various expenses that would be incurred.

Then the above expenses would be bifurcated into fixed and variable. All the variable expenses would include the cost of the injections, band aids etc. whereas the fixed expenses would include the salaries of the doctors, nurses, rent etc.

Then the total monthly income and the expenses would be calculated.

Then adjustment have to be made so that the income is equal to the expenses since otherwise there would be a loss.

Cut spending’s in case, there is loss

Review the budget on monthly basis on the basis of the actual results achieved during the previous month (Concordia, 2016).

The following are the assumptions involved:

That the prices of the various band aids, injections would remain constant

That no other expenses would be incurred apart from the ones listed in the budget.

The main areas of concern would be the following:

That the actual results may outgrow the budgeted expenses

There are certain expenses that were never planned

That the revenues have been overestimated

That the allocation of the various expenses goes wrong

All the expenses are underestimated

Who is to be blamed in case this budget does not fall through

Suppose, a particular amount of expense has been allocated to one of the departments and what if the supervisor of that department in order to finish that budget spends recklessly (Accounting tools, 2016).

2: The following is the budget for the month of July:

The following is the budget for the month of June:

The following are the reasons for the variance:

For the month of July:

There is no change in the amount of the revenue.

The revenue from the patients were less

The cost of the vaccines was higher

The cost of the band aids purchased was higher

The rent paid was higher than the budgeted amount

The receptionist was paid more than what was expected.

For the month of June:

The cost of the vaccines was higher

The cost of the band aids purchased was higher

The rent paid was higher than the budgeted amount

As for the recommendation, since the actual amounts incurred as expenses were higher than the budgeted amounts, these changed or the actual amounts plus 5 or 10% must be taken into consideration while preparing the budget for the next month. That increase of 5 to 10% would include the rise in the cost of the various vaccines, bad aids etc.

References:

Basic steps to making a budget. (2016). Concordia.ca. Retrieved 28 September 2016, from https://www.concordia.ca/students/financial-support/budgeting/basic-steps-to-makingabudget.html

What are the disadvantages of budgeting? – Questions & Answers – AccountingTools. (2016).Accountingtools.com. Retrieved 28 September 2016, from https://www.accountingtools.com/questions-and-answers/what-are-the-disadvantages-of-budgeting.html

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