Docstoc

Budgeting

Document Sample
Budgeting Powered By Docstoc
					Budget Exercise
Laser Medical Resource Center

Last Medical is a highly recognized medical center that
provided exceptional coverage. The Resource Center is one of
the primary departments in this company as many individuals
are in need of many different resources on a daily bases.

Nikul Patel
7/11/2010
Info 640-Managing Information Orgs
Professor Catherine Collins
Table of Contents
Introduction .................................................................................................................................................. 3
Program Budget ............................................................................................................................................ 4
New Services or Products ............................................................................................................................. 6
Salary Increase .............................................................................................................................................. 8
Appendix ....................................................................................................................................................... 9
   1.1 Program Budget .................................................................................................................................. 9
   2.1 Cost Benefit Analysis for New Product ............................................................................................. 10
   2.2 Program Budget Division for New Product or Service ...................................................................... 11
   3.1 Cost Benefit Analysis for Salary Increase .......................................................................................... 12
   3.2 Program Budget for Salary Increase ................................................................................................. 13
Bibliography ................................................................................................................................................ 14
Introduction
Laser Medical is a company that has been developed throughout the years due to great

management and services. This company consists of an exceptional department known as Laser

Medical Resource Center. It has been developed to add other employees with resources to make

their jobs easier and more accurate. Hundreds of resource transactions are processed in a day as

medical information is consistently updating. The resource center consists of three employees:

one information professional in the organization; the resource center also has one part-time Para-

professional, and one full-time clerical position assigned to it. These employees work throughout

the day to provide the most efficient and reliable resource data upon the request of other

employees. It is very important to ensure that the employees get the information as soon as

possible as the longer it takes the resource center to process the information the longer it takes

for the employee to accomplish their task. It will later be shown how adding a simple service

may be an initial cost however it will save time and money in the long run.

       After reading “Budgeting for Manager” we can say budgeting is extremely important

using the determined goals as it can help lead the team to success. Determining the goals of the

department are extremely important as the resource center budgeting is determined accordingly.

Budgeting will be dependent on these factors to ensure the minimum amount of budget is used to

obtain maximum efficiency and productivity. Salary for the resource center employees is also

important as they will function accordingly. A cost benefit analysis must be conducted to see

how an increase in salary will help benefit the company in the end.
Program Budget
    Goals:


             1. To better serve employees by providing optimal resources.

             2. Create and disseminate resources

             3. Create a national network of communities of practice through the connection

                of national, state, and local networks, organizations, and practitioners

                affiliated with Medical practice.

             4. Provide news briefing covering items of interest to the organization.


    Programs/Services


             1. Access to internal and external resources

                    a. The resource center shall provide their clients with resources gathered

                        throughout the company and within the company.

             2. Education and Training

                    a. The resource center shall provide education and training according to

                        their positions in the company. This service will allow individuals to

                        become trained in any field within the company.

             3. Update and purchase of material.

                    a. The Resource center will update resources and material that is out of

                        date. The center shall purchase new material according to the

                        requirements and needs of the company.

             4. Support

                    a. The Resource center shall provide support to all employees that

                        require assistance with varies resources.
The division of the line-item budget to a program budget has been accomplished through the

different programs/services provided by the organization. The budget was allocated according to

the type of program or service offered. Depending on the type of expenditure some programs

were allocated with excessive funding while others had none. Some of the expenditures were

mainly active for particular programs and services. Now the salary was allocated to the most

time spent on a type of service. The more time consuming and frequently used programs and

services were allocated more salary as it would take longer to accomplish. Program one had the

least amount of allocation due to the fact that it was only allowing employees to access material

that was in existence, there wasn’t much work needed in order to accomplish this service. Now

program two was allocated the second highest amount since it involved Education and Training.

These services help the employees learn new material and concepts that the company distributes.

It also allows new employees to learn about the company, its roles and rules. Majority of the

allocation was to program three as subscriptions and books are a physical cost that must be

purchased when it is out of date, missing or a new product. We also notice that only program

four was allocated money in each section vs. the other programs because it was Support. The

support program requires all type of resources, even though it may not me extensive, in order to

operate thus the allocation method.


       (See Appendix 1.1)
New Services or Products

       The resource center, after a long thought process, has developed a new product to aid the

company. As we read in Chapter 5 of “Budgeting for Managers” we cannot determine figures for

the budget using past experience. Since a new budgeting plan must be advised a new product or

service can be introduced if it will save the company money. The Laser Medical Resource center

noticed there are many individuals who visit the resource center during the day. Laser Medical

Resource Center noticed that all of their services were mainly geared only towards the

employees. Even though this department is in existence mainly for the company’s use, they can

work with external individuals to ease the load on other departments such the Human Resources

Department as they do have majority of the resources to do so. The resource center is adding an

automated system to the department to help make the process of assistance easier. This will aid

in helping those individual searching for resources. This will allow them the provided services

and assistance much faster as the automated system will allowing taking the load off the resource

center employees. This system will allow the user to request certain material if the office is busy.

The resource center will later have the information ready and contact the source to retrieve the

requested resources.


       This product is will be very effective in the resource department. It will save the company

money as employees will not have to wait in line in order to be assisted. Using the mindtools

reading we can say it is very important to create a service or program which will save the

company money, even though the initial cost may be high. A cost benefit analysis can be used to

ensure that this service is cost effective. (See Appendix 2.1)The option to request information

saves the company money because now the resource center has work to do when the department

is empty. This allows more productivity while saving money.
       The budgeting chart was altered due to the new product release. This product needed

extensive funding as it was a very important factor in the resource center. The Subscriptions and

Books expenditure has been decreased as more budgets were necessary for supplies and travel

time. Since the subscription and books had the greatest budget thus the total decrease of $15,100.

The rest of the budget allocation was left as is due to the fact that they were already allocated a

minimum amount of the budget. When reallocating the budgets it was difficult at first as it was

unsure where the budget should be altered to ensure that all expenditures are provided. (See

Appendix 2.2)
Salary Increase

       Salary increase within the company is an essential step as it helps determine those

employees who are excelling and those who do more work than they are paid for. Increasing

salary is a difficult job for the company as it is near impossible to provide a salary increase to

everyone. The importance of every program is crucial to the resource center thus the increase

there will be an increase in salary for each program/service. A cost/benefit analysis can be used

to determine how an increase in salary will help increase productivity while saving them money

in the end. The cost of increasing salary was fairly simple while determining the benefits were

hard to estimate as they are never a given fact. (See Appendix 3.1)


       According to the WorldatWork average salary increase for 2010 has be around 2.5%.

Using this figure we determined a salary increase of $950 for each product/service as it is

believed that each service is highly necessary and an equal increase in salary is also needed. To

alter for the salary increase we had to decrease funding from subscription and a book as it was

the highest expenditure. Since program/service 4 was allocated the least amount of money we

left it the same however since program/service 3 had the most we removed double the amount

compared to programs 1 and 2 which were deducted by $950 each. This was the most effective

way as the other expenditures were extremely necessary and were already allocated a less

amount.
Appendix


1.1 Program Budget
                                                        Program
Expenditures                 Total             1           2            3            4
                             $             $           $            $           $
Subscriptions and books      156,000.00   20,000.00   35,000.00    100,000.00   1,000.00
Supplies (including          $             $           $            $           $
photocopies)                 9,300.00     -           5,000.00     -            4,300.00
                             $             $           $            $           $
Phone, fax, postage          4,500.00     2,250.00    -            -            2,250.00
                             $             $           $            $           $
Staff travel                 1,200.00     -           -            500.00       700.00

                             $            $           $            $            $
Subtotal                     171,000.00   22,250.00   40,000.00    100,500.00   8,250.00
                             $            $           $            $            $
Salaries                     107,400.00   11,400.00   43,000.00    10,000.00    43,000.00
Fringe benefits @ 38% of     $            $           $            $            $
salaries                     40,812.00    4,332.00    16,340.00    3,800.00     16,340.00

                             $            $           $            $            $
Subtotal                     319,212.00   37,982.00   99,340.00    114,300.00   67,590.00

Organizational overhead @    $            $           $            $            $
21% of non-salary expenses   35,910.00    4,672.50    8,400.00     21,105.00    1,732.50

                             $            $           $            $            $
Total                        355,122.00   42,654.50   107,740.00   135,405.00   69,322.50
2.1 Cost Benefit Analysis for New Product
                                      Cost/Benefit Analysis
Costs:
Equipment
                             3 networked
                             computers                                      $ 9,000.00
                             Software                                       $   800.00
                             Printer                                        $   300.00
                             Cables and
                             Installation                                   $ 5,000.00

Total Cost                                                                  $ 15,100.00

Benefits
                             Saves the amount of
                             work hours lost                                              per
                             waiting in line                   estimated:   $ 10,000.00   year
                             Double the use of                                            per
                             resources                         estimated:   $ 20,000.00   year
                             Improve accuracy of                                          per
                             requested resources               estimated:   $ 5,000.00    year
                                                                                          per
                             Less employees                    estimated:   $ 50,000.00   year

Total Cost per year                                                         $ 85,000.00


Cost/Benefit -Payback Time   15100/85000=           0.1776471 approx. 10 months
               2.2 Program Budget Division for New Product or Service

                                                                        Program
Expenditures                                  Total            1           2            3          4          5
                                              $             $           $           $          $           $
Subscriptions and books                       140,900.00   15,000.00   30,000.00   95,000.00   900.00     -
                                              $             $           $           $          $           $
Supplies (including photocopies)              18,300.00    -           5,000.00    -           4,300.00   9,000.00
                                              $             $           $           $          $           $
Phone, fax, postage, internet                 5,600.00     2,250.00    -           -           2,250.00   1,100.00
                                              $             $           $           $          $           $
Staff travel                                  6,200.00     -           -           500.00      700.00     5,000.00

                                              $          $         $               $           $          $
Subtotal                                      171,000.00 17,250.00 35,000.00       95,500.00   8,150.00 15,100.00
                                              $          $         $               $           $          $
Salaries                                      107,400.00 11,400.00 43,000.00       10,000.00   43,000.00 -
                                              $          $         $               $           $          $
Fringe benefits @ 38% of salaries             40,812.00 4,332.00 16,340.00         3,800.00    16,340.00 -

                                              $          $         $               $          $         $
Subtotal                                      319,212.00 32,982.00 94,340.00       109,300.00 67,490.00 15,100.00

Organizational overhead @ 21% of non-salary   $            $           $           $           $          $
expenses                                      35,910.00    3,622.50    7,350.00    20,055.00   1,711.50   3,171.00

                                              $          $         $          $          $         $
Total                                         355,122.00 36,604.50 101,690.00 129,355.00 69,201.50 18,271.00
3.1 Cost Benefit Analysis for Salary Increase
                                        Cost/Benefit Analysis
Costs:

                        Salary increase for
                        Information                                          $
                        Professional                                         2,000.00
                        Salary increase for full-                            $
                        time clerical position                               1,000.00
                        Salary increase for
                        part time Para-                                      $
                        professional                                         800.00


                                                                             $
Total Cost                                                                   3,800.00

Benefits
                        Motivation will almost                               $           per
                        double work efficiency                  estimated:   4,000.00    year
                        Saves the company
                        from hiring another
                        part-time employee                                   $           per
                        and providing benefits                  estimated:   40,000.00   year
                        Improve accuracy of                                  $           per
                        work                                    estimated:   1,000.00    year


                                                                             $
Total Cost per year                                                          45,000.00


Cost/Benefit -Payback                                           approx.
Time                    3800/65000=                 0.084444444 11months
3.2 Program Budget Division for Salary Increase
                                                                  Program
Expenditures                            Total            1            2           3          4
                                        $             $           $           $          $
Subscriptions and books                 152,200.00   19,050.00   34,050.00   98,100.00   1,000.00
                                        $             $           $           $          $
Supplies (including photocopies)        9,300.00     -           5,000.00    -           4,300.00
                                        $             $           $           $          $
Phone, fax, postage                     4,500.00     2,250.00    -           -           2,250.00
                                        $             $           $           $          $
Staff travel                            1,200.00     -           -           500.00      700.00

                                        $          $         $               $           $
Subtotal                                167,200.00 21,300.00 39,050.00       98,600.00   8,250.00
                                        $          $         $               $           $
Salaries                                111,200.00 12,350.00 43,950.00       10,950.00   43,950.00
                                        $          $         $               $           $
Fringe benefits @ 38% of salaries       40,812.00 4,693.00 16,701.00         4,161.00    16,701.00

                                        $          $         $               $          $
Subtotal                                319,212.00 38,343.00 99,701.00       113,711.00 68,901.00

Organizational overhead @ 21% of non-   $            $           $           $           $
salary expenses                         35,910.00    4,473.00    8,200.50    20,706.00   1,732.50

                                        $          $         $          $          $
Total                                   355,122.00 42,816.00 107,901.50 134,417.00 70,633.50
Bibliography
"Average Salary Budget Increases Up, But Performance Factoring into Pay
Increases."WorldatWork. Web. 28 July 2010.
<http://www.worldatwork.org/waw/adimComment?id=39953&from=HR News>.

Byrd, S., Courson, G., Roderick, E., & Taylor, J.M. (2001). Cost/benefit Analysis for Digital
Library Projects: The Virginia Historical Inventory Project (VHI). The Bottom Line, 14(2), 65-
75.

"Cost Benefit Analysis - Decision-Making Skills Training from MindTools.com." Mind Tools -
Management Training, Leadership Training and Career Training - Right Here, Right Now. Web.
28 July 2010. <http://www.mindtools.com/pages/article/newTED_08.htm>.

Elliott, D.S., Holt, G.E., Hayden, S.W., & Holt, L.E. (2007). Fundamentals of cost-benefit
analysis. In Measuring your library’s value: How to do a cost-benefit analysis for your public
library (pp. 9-27)

Zach, L. (2002). A Librarian’s Guide to Speaking the Business Language. Information Outlook,
6(6), 18-24.

Kemp, S., & Dunbar, E. (2003). Budgeting: Why and How. In Budgeting for Managers (pp.1-
152). New York: McGraw-Hill.

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:28
posted:5/16/2012
language:English
pages:14
fanzhongqing fanzhongqing http://
About