Response to Discussions Capital Vs Budget

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Question Description

Please read the Discussion Post 1 and Discussion Post 2 uploaded below and respond to each one. Your two responses should be at 150 words each, APA format and at least one reference.

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Capital vs. Operational Budget

 

The capital and operational budgets are the two most common budgets that a nurse manager deals with and they usually are funded through two separate accounts, but not always (Ledger and Dunham-Taylor, 2018).  Budgeting should be an ongoing process as this enhances one’s ability to determine a budget that most accurately reflects the conditions faced with (Penner, 2013). 

A capital budget reveals what capital equipment needs to be purchased; what structures need to be renovated, built, or leased; the amounts to be spent; and each asset’s estimated useful life (Berger, 2014).  They cover costs of long-term expenses or capital assets; including intravenous infusion pumps, patient beds, and other high-priced items (Ledger and Dunham-Taylor, 2018).  Each organization sets specific cost limits for what they consider an item to be a capital expense (Ledger and Dunham-Taylor).  Looking into these capital ticket items allows for a depreciation expense to be determined, which needs to be included in the next year’s budget (Berger, 2014).  Capital budgets require a higher level of justification because their costs are usually greater than operational expenses (Ledger and Dunham-Taylor, 2018).  Justification for capital items would include the replacement on non-functional or safety risk items or purchasing a new item to generate income (Ledger and Dunham-Taylor, 2018).    

Operational budgets include expenses that relate to the daily operations of a nursing unit; including salaries, equipment, supplies, maintenance, travel, education, and dues (Ledger and Dunham-Taylor, 2018).  An operational budget requires one to analyze patient volumes, such as patient days, visit, and/or procedures; revenue; and expenses, both personnel and non-personnel related (Penner, 2013).  Justifying these expenses would be done by reviewing the variances.  A manager should keep track of his/her budget and the variances throughout the year as this will help them determine their needs and will provide evidence to justify their demands (Penner, 2013).   


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Capital vs. Operational Budget The capital and operational budgets are the two most common budgets that a nurse manager deals with and they usually are funded through two separate accounts, but not always (Ledger and Dunham-Taylor, 2018). Budgeting should be an ongoing process as this enhances one’s ability to determine a budget that most accurately reflects the conditions faced with (Penner, 2013). A capital budget reveals what capital equipment needs to be purchased; what structures need to be renovated, built, or leased; the amounts to be spent; and each asset’s estimated useful life (Berger, 2014). They cover costs of long-term expenses or capital assets; including intravenous infusion pumps, patient beds, and other high-priced items (Ledger and Dunham-Taylor, 2018). Each organization sets specific cost limits for what they consider an item to be a capital expense (Ledger and Dunham-Taylor). Looking into these capital ticket items allows for a depreciation expense to be determined, which needs to be included in the next year’s budget (Berger, 2014). Capital budgets require a higher level of justification because their costs are usually greater than operational expenses (Ledger and Dunham-Taylor, 2018). Justification for capital items would include the replacement on non-functional or safety risk items or purchasing a new item to generate income (Ledger and Dunham-Taylor, 2018). Operational budgets include expenses that relate to the daily operations of a nursing unit; including salaries, equipment, supplies, maintenance, travel, education, and dues (Ledger and Dunham-Taylor, 2018). An operational budget requires one to analyze patient volumes, such as patient days, visit, and/or procedures; revenue; and expenses, both personnel and nonpersonnel related (Penner, 2013). Justifying these expenses would be done by reviewing the variances. A manager should keep track of his/her budget and the variances throughout the year as this will help them determine their needs and will provide evidence to justify their demands (Penner, 2013). Capital and Operating Budgets There are two types of budgets that nurse leaders will be expected to understand. The first is the operating budget and the second is the capital budget. Each budget requires an understanding of the expenses required to run a department. An operating budget is the dayto-day expenses that are required for a business or department to run smoothly. The capital budget are the expenses that a business incurs to benefit the future (Hall, 2018). Each of these budgets are treated differently and separately for accounting and tax purposes. The operating budget is developed to estimate what expenses or costs a department will incur during the year. This will include staff, small equipment, office supplies, and wages. To accurately prepare for the fiscal year a manager must look at the year before and based on data collected prepare a budget that allows for stability and growth. Continued monitoring is important and consumes a great deal of time on behalf of the manager. Following trends, like the daily census allows managers to project what their staffing needs are and make adjustments accordingly. Capital budgets are purchases that are made for the future growth of the department. These investments are larger items that are expected to be used for extended periods of time. This includes the building, large equipment, computers etc. The capital budget is developed separately from the operating budget and is often funded through separate sources, or accounts (Ledger & Dunham-Taylor, 2018). The rationale behind making capital purchases and preparing a capital budget is to prepare for the future and allow for grow. To be a capital asset it must provide useful service that lasts longer than a year. Preparation of an operating and capital budget is important in developing a productive and workable department. Adjustments can be made as fluctuations in profit and expenses change. A properly managed operating and capital budget will allow success in a department. ...
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Tutor Answer

Robert__F
School: UCLA

please use this file

Running Head: Capital Vs. Budget

1

Capital Vs. Budget
Name
Course
Date

Capital Vs. Budget
2
Capital Vs. Budget – Response 1

Each organization aims at succeeding in their day to day activities. In that regard, many
stakeholders in the managerial team apply some strategies that may help them attain full
capability using minimal resources possible. A company manager may employ various strategies
to evaluate the available resources in the organization. By assessing the quality of output, the
manager may know whether the available resources may lead the respective organization to
success or failure.
Additionally, through evaluating the volume of output that single input unit may produce.
To assess capabilities the company's management may need to determine the feedback given by
their customers. Positive feedback from the customers may tra...

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