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Adjusting the Budget Exercise

Review the information presented below in the Sample Operating Budget and adjust this budget according to the following:
You have just learned that inpatient charges will probably be 3% higher than projected and that outpatient charges are expected to increase by 8%, and that
your research grant support will be reduced by half.
The continuing education conference projected to net $3,200 has been canceled.
Salary expenses will likely be 2% higher than originally anticipated.
You are required to show a projected net profit of at least 50% of total revenue. If your revised budget generates less than this level of net profit or surplus,
indicate where you can probably cut expenses to meet the target and explain why the expenses you have chosen to cut are your best choices.
Sample Operating Budget—Department of Physical Therapy
(July 1, 20n1, through June 30, 20n2)
Revenue and Income
A. Inpatient Charges $550,000
B. Outpatient Charges $310,000
C. Research Grant Support $29,000
D. Continuing Education Conference $3,200
E. Supplies and Equipment Sales $11,500
Total Revenue $903,700
Direct Expenses
A. Salaries $260,000
B. Consultant $2,500
C. Honorarium $1,500
D. Minor Equipment $6,000
E. Equipment Rental $2,000
F. Travel $2,500
G. Telephone $5,000
H. Supplies $6,000
I. Postage $350
J. Copy Machine Rental $11,000
K. Advertisement $1,500
L. Dues $800
M. Books $350
N. Equipment Maintenance and Service Contracts $2,000
Total Direct Expenses $301,500
Indirect Expenses
A. Employee Benefits (23%) $59,800
B. Administration $23,000
C. Equipment Depreciation $7,200
D. Physical Plant Operation $39,000
E. Maintenance and Repairs $2,000
F. Building Depreciation $6,000
G. Laundry/Linen $2,500
H. Housekeeping $4,900
Total Indirect Expenses $144,400
Total Expenses $445,900
Net Profit or Loss $457,800

Sample Solution

ase study will address the concept of inflation – the rise in average level of prices sustained over time that corresponds to a fall in the internal (domestic) purchasing power of money – with regards to Venezuela. The goal here is to explore several trains of enquiry in order to critically evaluate the impact inflation has had – and may potentially have – on the national income and economic growth of Venezuela. As it stands, Venezuela’s inflation rate – 282972.8% – significantly exceeds that which holds 2nd position – Zimbabwe -175.66% (WorldEconomicForum 2019). In order to better decipher the notable disparity in inflation rates between Venezuela and the rest of the world, several areas will be analysed. This macroeconomic issue will be addressed with regards to challenges surrounding it alongside any potential benefits, it’s impact on the labour market, it’s fiscal impact in terms of taxes and government spending and potential policies that could be implemented in hope of combating it. Venezuela holds the highest recorded oil reserves in the world – possessing approximately 300 billion barrels – even surpassing Saudi Arabia. Evidently, oil is one of Venezuela’s most valuable commodities accounting for 95% of Venezuela’s exports and 25% of its gross domestic product (Independent 2018). However, during a period of time in which the global price of oil dropped, foreign demand to buy Venezuelan oil dipped simultaneously. A key factor that lead to Venezuela’s current crisis, is evidently their sole dependence on a single commodity – oil. As University of Florida’s Gamarra explains, this means “you are bound to the ups and downs of the oil price,”. Without a range of high value added assets, an economy lacks diversity and is vulnerable to ‘moments of downturns in your principal commodities (CNBC 2019).’ On an individual basis, hyperinflation renders any savings worthless due to its eroding impact on money. Consequently, people may hoard goods for instance, food due to the soaring prices. Situations such as these may lead to shortages of food supply, contributing to the issue further.

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