A nurse manager is working with the financial officer to develop the budget of the nursing unit for the next fiscal year. The nurse manager tells the financial officer that which of the following pieces of information will affect budget assumptions?

Question

a. The capital budget request for new emergency department equipment has been turned in for consideration by the hospital's administrative team.
b. The patient census likely will increase during the next fiscal year because two large physician groups have transferred their admission privileges to this hospital.
c. The participatory budgeting approach instituted last year has been helpful in controlling supply costs.
d. Zero-based budgeting will help the managers to be more efficient in establishing next year's budget.

Answer 1

ANS: B
Correct: Budget assumptions are future predictors of performance and include the stability of the price of supplies, the salary range needed to recruit and retain quality employees, new services offered by competitors, and the variability of the patient census.
Incorrect:
a. Capital budget requests that are awaiting approval do not affect budget assumptions that should be addressed in the next fiscal year.
c. The participatory budgeting approach involves front-line managers in the budgeting process, but it is not necessarily related to future budget assumptions.
d. Zero-based budgeting is prepared as if for the first time and is actually more time consuming and less efficient than incremental budgeting; also, zero-based budgeting is a method of budgeting and does not affect budget assumptions.