Chapter 17: Budgeting Basics for Nurses

Chapter 17: Budgeting Basics for Nurses

Complete Chapter Questions With Answers

Sample Questions Are Posted Below

MULTIPLE CHOICE

1. A nurse manager plans the fiscal budget to include salaries for two RNs for two 12-hour shifts with a patient census of 6 in the short-stay observation room. The nurse manager reviews the budget report 3 months later and notes that the salary expenses are higher than was budgeted because of higher-than-planned RN staff salaries. This additional RN staff is necessary to meet patient care needs because the census has remained constant at 10 patients rather than the 6 projected when the budget was developed. The difference between the planned budget and the actual cost is known as:

ANS:  B

Correct: Variance is the difference between the planned budget and actual results; it can be a positive or a negative discrepancy.

Incorrect:

1. Revenue is the income, but it is not analyzed to detect variations between predicted and actual expenses.
2. Monitoring is the process by which variances are identified.
3. Capital expenditures, which are long-term investments such as bedside computers, are part of the budget but are included in comparison with projected results.

DIF:    Application    REF:   p. 310

2. A nursing unit’s census consists primarily of long-term residents with a high risk for falls. To meet new safety regulations, the nurse manager must plan to replace all 50 patient beds with new beds equipped with Fall Watch electronic sensors that will detect when patients get out of bed. The manager will be involved in which type of budgeting to replace the beds?

ANS:  D

Correct: Capital budgets are concerned with major purchases such as equipment paid for over several years.

Incorrect:

1. A fiscal budget is projected over 12 months, whereas capital budgets involve long-term financial planning.
2. Labor budgets are concerned with salaries, wages, and employee benefits.
3. Operational budgets are composed of expenses needed to operate on a daily basis and revenue received for services rendered.

DIF:    Application    REF:   p. 314

3. A nurse manager is preparing a budget that does not base annual budgets on the revenue and expenditures of the prior year and has the advantage that outdated information is not integrated into the budget. The manager is using which budget method?

ANS:  A

Correct: The zero-based method is based on the assumption of no volume and no resources assigned; it essentially starts each new budget period at zero rather than building from past budgets.

Incorrect:

1. The incremental method uses the current budget with an incremental increase in consideration of future growth.
2. Labor budgets represent a type of budget, rather than a method of budgeting.
3. Operational is a type of budget rather than a method of budgeting.

DIF:    Application    REF:   p. 315

4. A nurse on the unit is heard saying, “I am not going to document that I used four catheters to start that IV; it doesn’t matter anyway.” What action can help the staff nurse understand the financial budget goals of the unit?

ANS:  C

Correct: Participating on the committee will give the nurse ownership of the unit’s budget and will provide insight into the unit’s budgetary goals.

Incorrect:

1. Having the nurse work in payroll would not help the nurse understand the intricacies of budgeting.
2. A personal budget may have some aspects of a unit budget but will not help the nurse understand the unit budgetary goals.
3. Keeping a log will not help the nurse integrate the concept of accountability in budgeting.

DIF:     Analysis           REF:    p. 320