Report On Principles Of Costing & Budget Control System | Healthcare
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Added on 2020-02-05
Report On Principles Of Costing & Budget Control System | Healthcare
Added on 2020-02-05
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MANAGING FINANCIAL RESOURCES INHEALTH AND SOCIAL CARE
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................3TASK 1............................................................................................................................................31.1Principles of costing and business control systems................................................................31.2 Factors need to consider to manage financial resources in organization...............................51.3 Regulatory requirements for managing resources.................................................................51.4 Evaluation of software for managing financial resources.....................................................6TASK 2............................................................................................................................................72.1 Different sources of income for health care organization.....................................................72.2 Factors affecting availability of finance for the business firm..............................................72.3 Different type of budget expenditure in health and social care organizations.......................92.4 Way in which decision about expenditure are made by the business firms..........................9TASK 3..........................................................................................................................................103.1 Cash budget for the business firm.......................................................................................103.2 Steps that can be adopted when one suspect about fraud....................................................113.3 Methods that can be used to control and monitor budget....................................................11TASK 4..........................................................................................................................................114.1 Information that is needed to make decision about level of service that will be offered toservice users...............................................................................................................................114.2 Relationship between level of service offered cost and expenditure...................................124.3 Impact of financial considerations on the individuals.........................................................124.4 Financial system that can improve service that will be offered to the customers...............12CONCLUSION..............................................................................................................................13REFERENCES..............................................................................................................................14Table 1Cost for single person in Care home for a month................................................................4Table 2 Cash budget......................................................................................................................10
INTRODUCTIONHealthcare industry is one of the fastest and most governing industries of the UK. There aremany firms that are operating in the mentioned industry. In the current report, principles ofcosting and budget control system are explained in detail. Along with this, in the report,regulatory requirements that affect management of financial resources are also discussed indetail. In middle part of the report, budget is prepared and methods that can be used to controland monitor budget are also discussed briefly. At end part of the report, financial considerationfor individuals is explained and ways that can be adopted to improve service are discussedbriefly.TASK 11.1Principles of costing and business control systemsPrinciples of costing are as follows.Cost is related to cause: According to this principle of costing cost is always related tothe cause due to which it originate. Cost greatly affected by the cause. Hence, firm ifintends to control cost must focus on the reasons due to which it comes in existence(Higham and Lin, 2011). Nature of varied cost are different from each other and sameare allocated among different business activities on the basis of cost relationship. Abnormal cost are charged as cost: Many times in the business incidents takes place liketheft and fire in the warehouse. In order to cover these loss firm incurred an amountwhich is expenditure. These expenditures are the abnormal cost for the firm. Normal costthat related to the production process are used in costing and are considered forcomparing firm performance in terms of cost. However, abnormal cost which comes inexistence due to abnormal incidents are not considered as cost and not charged on costcenters (Acerete, Stafford and Stapleton, 2011). Care home needs to consider only thosecosts that are incurred in respect to providing services to the customers as cost of servicesin its books of accounts.Cost is charged when it is incurred: In compliance with this principle Care home canrecord any expenditure in its books of accounts only when same amount is incurredactually by the firm. If any asset is purchase for residential home then it will be recordedas an expenditure only when same amount will be actually paid to the relevant entity.
Past cost cannot be carry forward in next year: As per this principle cost that is relatedto past year must not be carry forward for the next financial year. This is because if patyear cost is transferred to the current year then burden of cost increases and accurateperformance of the firm cannot be measured.Business control systemsSome specific business control systems are explained below.Cost benefit analysis: Cost benefit analysis is the one of the most important controlmethod. This is because by using this method it is identified that what amount of salesfirm needs to make in order to cover its cost (Tate, Ellram and Kirchoff, 2010). Hence,accordingly firm determined its sales target for overall business so that cost can becovered and good amount of profit can be earned in the business.Budget: Budget is the one of the important financial statement because it help firm incontrolling its business cost. By using this tool Care home can successfully control andreduce its business cost. It can be said that budget have great importance for the businessperformance. Cost center: Cost center refers to the department on which cost is charged by thebusiness firm (Binnendijk, Koren and Dror, 2012). In each cost center someone is maderesponsible for strong or poor performance of the business firm in terms of elevation incost. Hence, it can be said that cost center is the one of the integral part of the businesscontrol system of the firm.Outsourcing: Outsourcing is increasingly used by the business firm to control elevationin its cost. Sometimes it become very difficult for the employees of the business firm toperform business operation due to its complex nature. In such a case firm make use ofoutsourcing service in order to control its cost. By doing so it successfully reduce its cost.Forecasting: Forecast is the method that is used under the business control system.Under this business firm make forecast of cost and accordingly determine targets for thebusiness. In this way cost is controlled in the business by using forecast method.
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