Question

How to create an annual department budget for Venice Family clinic proposed capital project of telehealth

Answer 1

Annual Budget is the forecasted revenue during the particular year compared against the expenses incurred to generate that revenue. Annual Budget can be based on past years assumptions or fresh assumptions. Following steps need to be taken to complete the annual Budget:

1. Revenue for the year - Revenue can be based on no. of patients that will be served during the year along with fees to be charged.

2. Cost of Material: Based on Revenue required material/medicine cost needs to be calculated and on the basis of that cost budget to be prepared.

3. Fixed Overheads: Fixed overheads are required to be identified and calculated based on the time frame. Fixed Overheads include salaries, rent, rates, vehicle expenses, professional fees, etc.

4. Variable Overheads: Variable overheads are overheads based on revenue and thus can be calculated accordingly. Variable overheads include energy cost and other related expenses.

5. Capital Budget: Based on cost and revenue budget, we need to identify the capital assets that need to be procured and accordingly make the capital budget.

6. Taxes: Based on Profit earned during the period, taxes to be calculated.

7. Cash Flow: Cash Flow to be prepared based on cash inflow and outflow and the difference is excess cash or short cash. If excess cash, then deposits needs to be done and interest income to be earned, if short cash, loans to be availed and interest to be paid.