Throughout this course, you’ve examined the importance of anticipating financial fluctuations that may impact your organization’s ability to provide services. While financial managers have no time machines or crystal balls, they do have expense forecasts. Expense forecasting is one of the preeminent tools that financial managers can use to prepare their organizations for future fiscal turbulence. In this Assignment, you will examine a scenario and generate a corresponding expense forecast in Excel.
Before pursuing an opportunity or making a major purchase, financial decision makers must first ascertain if the expenditures are justified. Determining whether a new process, system, or purchase will yield worthwhile returns is no easy task. However, managers have a variety of tools to help them decide whether the new expenditure is warranted. Analyzing a venture’s benefit/cost ratio, marginal profit and loss statement, and break-even points enable nurse managers to make educated decisions about how they choose to commit their funds.
Note: For those Assignments in this course that require you to perform calculations you must:
- Use the Excel spreadsheet template for the Week 3 assignment
- Show all your calculations and formulas in the spreadsheet.
- Answer any questions included with the problems (as text in the Excel spreadsheet).
A title and reference page are NOT needed in this assignment. Put your name and assignment at the top of the Excel spreadsheet.
For those not comfortable with the use of Microsoft Excel, this week’s Optional Resources suggest several tutorials.
To prepare:
- Review the information in the Week 9 and 10 Learning Resources dealing with expense forecasting, profit and loss, break-even analysis, and benefit and cost ratio analysis. Focus on how they are calculated and how they can be used in decision making.
- View the following tutorial videos, provided in this week’s Learning Resources.
Use the Week 10 Application Assignment Template, provided in this week’s Learning Resources, to complete this assignment. Carefully examine the information in each of the scenarios and provide the necessary calculations. Using this information will help you answer the questions. Note: All the scenarios will be submitted as one document. Each scenario will be on a different tab in the spreadsheet.
Expense Forecasting
In this Application Assignment you calculate scenarios focusing on benefit/cost ratio analysis, marginal profit and loss statements, and break-even analysis. For these scenarios, you will utilize the provided figures to perform calculations and then make recommendations about the viability of the investment opportunities
Expense Forecasting Scenario
Your department has performed 20,000 procedures during the first six months (January–June) of 20X1. Spending during that period of time was $210,000 for fixed expense items and $1,200,000 for variable expense items. Of those amounts, $50,000 of fixed expense money was spent on preparing for a Joint Commission survey. Volume is anticipated to be 10% higher in the second half of the year. On November 1st, two new procedure technicians will begin work. The salary and fringe benefit costs for each are $96,000/year. Based on the information provided, prepare an expense forecast for 20X1.
| Annualization for Fixed: (Adjusted Total for Year to Date Expense/6) * 12 =Total Annualized Amounts | |||
| Annualization for Variable (Adjusted Total for Year to Date Expense/ 20,000) * 40,000 =Total Annualized Amounts. | |||
