Task 3: [1000 words]

Part (one). Brooklane Ltd. has recently appointed a new CEO of the company. The CEO has several new ideas for the organisation. One idea, which he wants to explore is the elimination of annual budgets. You are working as a management team member in this company and CEO has asked you to write a report which investigates this idea.

Question

1. Write a report for the CEO setting out the advantages and limitations of an annual budgeting system. Use academic sources to support your answer.

Part (two). The following information relates to the wards in the cardiology department of Good Health Hospital for one accounting period

Wards 1 2 3

Number of Beds 12 10 20

Total number of Patients 48 32 108

Total ward staff (excluding consultants) 8 8 12

Ward staff full-time equivalent 5 4 6

Variable operating costs for period 58,000 66,000 98,000

Operating fixed costs 85,000 67,000 88,000

General overhead costs 40,000 40,000 40,000

General overhead costs are made up of recharges from support services. The total cost of 120,000 is split equally between the three wards. The hospital manager is concerned about the high costs of running the three heart-care wards. She has asked you to investigate their performance.

Question

2. Write a report which investigates the costs of operating the three hospital wards. Your report should include appropriate measures of performance for each ward and you should draw conclusions from the costs. Calculate necessary calculations to support your conclusions.

[Hint: Calculations include: Patient (turnover) per bed, FTE Staff per bed & per patients, Variable Cost per bed & per patient and Fixed cost per bed & per patient.]