Budget and Finance Flashcards
Forecast Budget *
Budget line items (salary, benefits) are based on the previous year’s budget and test volumes.
Appropriation Budget
Associated with governmental bodies, where a fixed amount of money is granted for a fixed amount of time.
Flexible Budget
Fixed (overhead) and variable (reagents) are itemized, allowing for changes in test volume.
Operational Budget *
Most commonly used by lab managers for standard continuous operation of the organization.
Capital Budget *
Designed for purchase of equipment, building or remodeling.
Zero-base Budget *
Each budget line is developed COMPLETELY NEW from scratch. Historical info is disregarded. Only highest ranked items are funded. Used to get rid of dead weight.
Rolling-Quarter Budget *
Prepared quarterly, more accurate than annual budget.
Cash Budget *
Financial tool prepared monthly to anticipate cash flow, rates money is reveived and spent.
What is the difference between CASH and REVENUE? *
Revenue is the total amount of income generated
Cash flow tracks the amount of cash in hand and the cash flowing in and out of the company.
Financial Accounting *
Useful for external review, looks at costs in aggregate, uses double entry book keeping and generally accepted accounting principles.
Cash Accounting *
Useful for internal purposes, less formal rules. Identifies cost on a UNIT basis. Assign costs to a revenue generating activity.
Direct costs *
Cost assigned to to production of a product; ie. a billable test. Reagents, consumables, QC, and technical labor.
Indirect Costs *
The costs not directly involved with the billable test. Non-technical labor: Phlebs, supervisors, admins, billing, couriers.
Variable Costs *
Costs that change with test volume; reagents, supplies (direct), supervisor time to review QC (indirect)…
Fixed Costs *
Costs that don’t change with test volume; equipment lease, techs needed for coverage, admin overhead…
Prime Costs *
Direct labor and direct material costs required to produce a billable test. Used to compare different methodologies.
Conversion Costs *
Direct labor and Section overhead to produce a billable result Used to compare cost to measure the same reagent and test volume on two different analyzers.
Ready to Serve Costs *
Costs required just to keep the laboratory operational; Section and admin overhead, cost to collect and report results.
Full Production Costs *
Cost to produce a billable result, excluding Indirect and Ready to Serve costs (includes Prime and Conversion costs).
Fully Loaded Costs *
Includes Full Production and Ready to serve costs.
Fully Loaded Cost Components ***
- Prime Costs (direct labor and materials)
- Conversion Costs (Direct labor and Section OH)
- Full Production Cost (Direct labor, Direct material, Section OH)
- Ready to Serve Costs (Section OH, Collect and Report, Gen Lab OH)
- Fully Loaded Costs (Prime and Ready to Serve)
Fringe Benefit Cost *
Benefit Cost (25-35% of salary) including: Health Ins. Life and Disability Ins., Retirement plan, Vacation, Sick and Maternity leaves, and Social Security tax.
Salary Costs
Employee compensation + Fringe Benefits + Recruitment, Orientation, Training, and Development
Limitations of Laboratory Cost Reduction *
Fully Loaded Costs have a high percentage of Fixed Costs. Ex. A 50% decrease in workload results in on a 14% reduction in FTE’s.
Cost to Break Even **
Fixed Costs / (Test Price - Variable Costs)
Charge to Break Even **
(Fixed Cost/Test Volume) + Variable Cost