AFDM workshop: BudgetingQuestion 1: solutionsCalculated figures Wards123Patient turnover (per bed)43.25.4FTE staff per bed0.420.400.30FTE staff per patient0.100.130.06Variable cost per bed£4,833£6,600£4,900Vairable cost per patient£1,208£2,063£907Fixed costs per bed£7,083£6,700£4,400Fixed cost per patient£1,771£2,094£815 Discussion points:1. Allocation of general overhead costs – better per bed or per patient?2. In evaluating performance, look only at those costs which are controllable – variable costs?3. When comparing costs, consider the issue of differing size of each ward: does ward 3 benefitfrom economies of scale?4. Do any of the wards offer specialist or more intensive care which is more expensive?5. Ward 2 has the lowest bed turnover and highest costs – specialist/longer-term care?Question 2: solutionsThe sources of information can be classified into two main groups: internal sources of informationand external sources of information.Internal sources of information will include:1. The organisation’s short-term and long-term plans;2. Previous year’s actual results;3. Operational changes from previous year;4. Staff training requirement;5. Capital expenditure plans and any non-current asset requirements, etc.External sources of information will include:1. An analysis of the firm’s economic environment, including market trends and the activities ofcompetitors;2. Estimations of inflation;3. Forecasts of exchange-rate movements for overseas sales and purchases;4. Supplier’s price changes, etc.
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