LP6.1 Written Assignment: BudgetingThis assignment will assess the competency 5. Examine the impact...

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LP6.1 Written Assignment: BudgetingThis assignment will assess the competency 5. Examine the impact of management decisions on cost of capital for healthcare organizations.Directions: In a minimum of 2 full pages answer the questions provided below.• Please answer the questions in a double-spaced word document.• Include a title page, your name, instructor, course, date, and Learning Plan assignment [Learning Plan 6].• Remember to cite references in APA format.1. Define a budget and describe how management uses it.2. Describe the two major theories used for the detection of out-of-control costs.3. Define future value and present value.4. Explain the budgeting process in detail.

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Running Head: WRITTEN ASSIGNMENT - BUDGETING 1
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WRITTEN ASSIGNMENT - BUDGETING  2 
Budget and Its Significance to Management 
A budget is an important financial document that provides a quantitative estimation of 
income and expenses for the future period. In other words, it is the expression of management’s 
quantitative plan for the forthcoming time. A budget that is prepared in an appropriate manner 
will provide the best planning and controlling factors for the management. Management will get 
an outline about their revenue generating capacity and some expenses that will occur and the 
profit generating capacity (Flex Study, n.d.).  
Management can control expenses and misuse of available resources. It will indicate 
about the cash inflow and outflow for the forthcoming period. It provides an outline as how 
many resources should be allocated to the management for various expenses and to check 
whether the company’s expenses and revenue generation is on par with the budget or not. If not 
where there are problem and the factor that caused both positive and negative variation (Flex 
Study, n.d.). It will enhance the management to improve the analysis and in forming the best 
strategy that will yield better benefit for the company. It will provide assistance in forming 
operational level, functional level, and corporate level business strategy to improve the overall 
performance and in overcoming the existing weakness.  
Two Major Theories 
Classical statistical theory and decision theory are the two major theories that are used for 
detecting out of control costs (Kyburg Jr., 1974).

LP6.1 Written Assignment: Budgeting This assignment will assess the competency 5. Examine the impact of management decisions on cost of capital for healthcare organizations. Directions: In a minimum...

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