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Budgeting and planning processes

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1-Why are planning and budgeting so important to an organizations success?
2-Briefly describe the planning process. Be sure to include summaries of the strategic, operating and financial plans.
3-Describe the components of a financial plan.

Consider the following hospital data:
Static budget Flexible Budget Actual results
Revenues $4.7 $4.8 $4.1
Costs 4.1 4.1 4.2
Profits 0.6 0.7 0.3

a- Calculate and interpret the profit variance.
b- Calculate and interpret the revenue variance.
c- Calculate and interpret the cost variance.
d- Calculate and interpret the volume and price variance on the revenue side.
e- Calculate and interpret the volume and management variances on the cost side.
f- How are the variances calculated above related?

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Solution Summary

Details of budgeting and planning processes, different types of plans and calculations for different types of variances are given in a Word attachment.

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Budget Assignment

A. Identify the stages of the budgeting process and evaluate their effectiveness.

b. Evaluate the level and validity of detailed assumptions used to create budget estimates.

c. Discuss the role of the budget as an analytic tool that can be used to evaluate organizational performance.

d. Explain how the budget can be used to find and eliminate inefficiencies in an organization's performance.

e. Explain the role of the budget in the business control cycle.

f. Analyze internal and external control mechanisms that can be put in place to monitor and evaluate the budget.

g. Describe how the budget can be used in the performance accountability and reward process.

h. Identify a major business initiative in any organization that was approved last year as a result of the budget process, and explain how the budget was used in the approval process.

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