Question

In the context of a hospital outpatient department budgeting for 15,000 visits per year but only experiencing 12,000 patient visits by the end of the year, what can be inferred about the comparison between the flexible budget and the simple budget? How might the variance between the budgeted and actual visits impact the financial performance assessment and planning processes within the hospital?

Answer 1

The variance between the budgeted and actual visits in a hospital outpatient department can provide insights into financial performance assessment and planning processes in the hospital.

Step-by-step explanation:

When comparing the flexible budget to the simple budget in the context of a hospital outpatient department, the variance between the budgeted and actual visits can provide insights into the financial performance assessment and planning processes within the hospital.

If the hospital budgeted for 15,000 visits but only experienced 12,000 patient visits, it suggests that the actual visits were lower than expected. This variance can impact the financial performance assessment by indicating a potential shortfall in revenue. The hospital may need to revise its budget and financial plans to account for the lower number of visits and adjust expenses accordingly.

Furthermore, the variance may also suggest the need to analyze the reasons behind the lower patient visits, such as changes in patient behavior, competition, or other factors. This analysis can help the hospital make informed decisions and adjustments to improve financial performance and planning in the future.