Business Budgeting Expenses of Equipment Charges

Question: Describe about the Business Budgeting for Expenses of Equipment Charges. Answer: 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 equipments, 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 spendings 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: Particulars Child Adult Budget 700.00 400.00 Revenue 28,000.00 12,000.00 40,000.00 Costs: Vaccines 7,000.00 4,000.00 11,000.00 Band aids 1,400.00 400.00 1,800.00 Rent - - 300.00 Receptionist - - 500.00 Nurse 3,500.00 1,200.00 4,700.00 Total costs 18,300.00 Profits 21,700.00 The following is the budget for the month of June: Particulars Child Adult Budget Revenue 28,000.00 12,000.00 40,000.00 Costs: Vaccines 7,000.00 4,000.00 11,000.00 Band aids 1,400.00 400.00 1,800.00 Rent - - 300.00 Receptionist - - 500.00 Nurse 3,500.00 1,200.00 4,700.00 Total costs 18,300.00 Profits 21,700.00 The following is the comparison for the months: July Particulars Child Adult Budget Actual Variance 500.00 200.00 Revenue 20,000.00 6,000.00 26,000.00 26,000.00 - Costs: Vaccines 5,000.00 2,000.00 7,000.00 8,400.00 -1,400.00 Band aids 1,000.00 200.00 1,200.00 1,450.00 -250.00 Rent - - 300.00 400.00 -100.00 Receptionist - - 500.00 600.00 -100.00 Nurse 2,500.00 600.00 3,100.00 3,100.00 - Total costs 12,100.00 13,950.00 -1,850.00 Profits 13,900.00 12,050.00 1,850.00 June Particulars Child Adult Budget Actual Variance 900.00 500.00 Revenue 36,000.00 15,000.00 51,000.00 51,000.00 - Costs: Vaccines 9,000.00 5,000.00 14,000.00 16,800.00 -2,800.00 Band aids 1,800.00 500.00 2,300.00 2,750.00 -450.00 Rent - - 300.00 400.00 -100.00 Receptionist - - 500.00 500.00 - Nurse 4,500.00 1,500.00 6,000.00 6,000.00 - Total costs 23,100.00 26,450.00 -3,350.00 Profits 27,900.00 24,550.00 3,350.00 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 ofbudgeting? - 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