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A budgeting system is typically composed offive components.[2]These are the following:

Budget objectives: This component is the why behind a budgeting system and includes overarching organizational goals and specific programming efforts. For example, suppose a local hospitalplans to set up a new dialysis center to better serve its patients with dialysis-dependent kidney diseases. In that case, managers should detail how such an initiative would impact next year's budget.

Capital budget: This component typically includes equipment and infrastructure such as a robotic surgical system, CT/MRI machine, or new off-site clinic office space. Whenever a capital investment is considered, managers should go through a thorough evaluation process to determine whether the net benefit outweighs the net cost over the project's lifespan.

Statistical projections: This component serves as the weather forecast function of a budgeting systemwith estimates ofthe volumes of services and procedures required during a budgetary period. This forecast will not only help with revenue projection but will also help with staffing and resource planning to ensure supply meets the demand.

Revenue budget: This is the estimated gross revenue from various output streams. For example, an ophthalmology clinic may estimate its gross income by combining revenues from in-office clinical care and operating room surgical care.

Operating budget: This is the expense side of the budget, composed of personnel salaries, supply and material costs, and administrative overhead. To accurately estimate the total expenses, one must understand the nature of the fees, i.e., fixed cost vs. variable cost.