The nurse manager tells the staff that this year's budget numbers will not change, even if census drops over the rest of the year. How should the staff interpret this information?

1. The budget is a fixed one.
2. The hospital uses incremental budgets.
3. The hospital uses a variable budget.
4. The hospital starts the budgeting process with a zero-based budget.


1
Rationale 1: A fixed budget is one in which budgeted amounts are set regardless of changes that occur during the year, such as patient volume or program activities.
Rationale 2: An incremental or line-by-line budget lists each expense item or category on a separate expense line. It is not possible to tell from this description if the budget is incremental.
Rationale 3: A variable budget is developed with the understanding that adjustments to the budget may be made during the year based on changes in revenue, patient census, utilization of supplies, and other expenses.
Rationale 4: A zero-based budget assumes the base for projecting next year's budget is zero. It is not possible to tell if the budget being described is a zero-based budget.
Global Rationale:

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