Question 1

The nurse manager is reviewing the previous month's budget and notes a favorable efficiency variance of the full-time equivalents (FTEs). Which options may be reasons for this favorable variance?
A) Greater client acuity
B) Extravagant use of resources
C) Understaffing the unit
D) Low client acuity
E) Use of agency nurses to supplement staff

Accepted Answer

Understaffing the unit and low client acuity can lead to a favorable efficiency variance as fewer staff hours are needed, reducing costs.

Question 2

A nursing executive is comparing the entire hospital financials for the month and notes that the medical laboratory's revenue is higher than environmental services. What is a possible explanation?
A) The laboratory has increased charges for its services.
B) Environmental services is a non-revenue-producing cost center.
C) The laboratory is a non-revenue-producing cost center.
D) The nursing units affect the laboratory charges.

Accepted Answer

1. An increase in charges by the laboratory is not significant in this instance.
2. Environmental services does not charge clients for its services; it is a non-revenue-producing cost center.
3. The laboratory does charge clients for its services; it is a revenue-producing cost center.
4. The nursing unit does affect laboratories' revenue, but this is not applicable to the question.

Question 3

The nurse manager's goal is to adequately staff the unit and use minimal supplementary staff. The manager has added the cost of this supplementary staff to the unit's operating budget. A colleague informs the manager it should have been added to which budget?
A) The personnel budget
B) The operating budget
C) The revenue budget
D) The fixed budget

Accepted Answer

The cost of supplementary staff is a personnel expense and should be included in the personnel budget, not the operating budget. The operating budget pertains to operational expenses such as supplies and equipment, while the personnel budget covers staffing expenses.

Question 4

The nurse manager identified that the census was higher than anticipated and the client acuity level was also high; however, there were fewer nursing hours paid. This variance is an example of which budgetary variance?
A) Efficiency
B) Nonsalary expenditure
C) Rate
D) Volume

Accepted Answer

The answer of The nurse manager identified that the census...

Question 5

With the current health care industry focus on managed care, nurses must be more cost-conscious. Which option is an example of a nurse being cost-conscious?
A) The nurse reviewing the client's itemized bill each day
B) The nurse's decision to use fewer supplies when changing a dressing
C) The nurse manager reviewing client costs on a daily basis
D) The nurse manager requesting that the materials management director obtain quotes for less expensive items

Accepted Answer

The nurse's decision to use fewer supplies when changing a dressing is an example of being cost-conscious because it involves using resources in a more efficient manner, which can lead to cost savings. Option A involves reviewing the client's itemized bill, which may be helpful but does not necessarily lead to cost savings. Option C involves a nurse manager reviewing costs, which is important but does not necessarily involve a nurse being cost-conscious. Option D involves requesting quotes for less expensive items, which is a responsibility of materials management and does not necessarily involve a nurse being cost-conscious.

Question 6

The nurse manager tells the staff that this year's budget numbers will not change, even if census drops over the rest of the year. How should the staff interpret this information?
A) The budget is a fixed one.
B) The hospital uses incremental budgets.
C) The hospital uses a variable budget.
D) The hospital starts the budgeting process with a zero-based budget.

Accepted Answer

The nurse manager's statement suggests that the budget is a fixed one and will not change regardless of changes in census.

Question 7

The nurse has received a commendable progress evaluation and will receive a 3 percent merit raise. The base salary for an RN is $48,000. Based on this information, the new projected base salary for this RN will be $_____.

Accepted Answer

The answer of The nurse has received a commendable progress...

Question 8

Every month the chief financial officer (CFO) reviews the budget with the hospital's board of directors. The CFO requests a million dollars to purchase a new MRI (magnetic response imaging) unit for the radiology department. Which category best describes this request?
A) Non-revenue expense
B) Capital expense
C) Variable cost
D) Allocation of funds

Accepted Answer

The request for a new MRI unit is a capital expense as it involves a significant investment in a long-term asset that will benefit the hospital for years to come. The purchase of an MRI unit is not a non-revenue expense, as it has the potential to generate revenue through patient fees. It is not a variable cost, as it is a fixed cost that does not vary with the level of patients treated. It is also not an allocation of funds, as no existing funds are being allocated, but rather a new investment is being proposed.

Question 9

A nurse manager of a medical unit and a nurse manager of a critical care unit are discussing their personnel budgets. The medical unit budget is higher than the critical care unit budget. What are plausible reasons for this difference?
A) There is a higher turnover rate of nursing staff on the medical unit.
B) Costs were incurred during a recent remodeling of the medical unit.
C) The client acuity on the critical care unit is higher.
D) The critical care manager is a better manager than the medical unit manager.
E) More staff on the medical unit received premium pay this year.

Accepted Answer

The answer of A nurse manager of a medical unit...

Question 10

The unit employs 35 FTEs (full-time equivalents) based on an 8-hour shift. The average benefits for these FTEs are 12 vacation days, 10 holidays, 6 sick days, and 4 personal days. Based on these figures, the FTE required per employee to replace benefit time is _____ FTE. Round to the nearest hundredth FTE.

Accepted Answer

The answer of The unit employs 35 FTEs (full-time equivalents)...

Question 11

A client's spouse is concerned about the cost of hospitalization. The nurse says, "Since your spouse is on Medicare, the hospital will be paid according to the DRG." What does the nurse mean by this statement?
A) Medicare will pay the total cost for the care provided.
B) Medicare will pay an average of the total costs.
C) Medicare will pay based on the usual cost of the treatments provided.
D) Medicare will pay based on a set amount for the specific condition for which the client was hospitalized.

Accepted Answer

DRG stands for Diagnosis Related Group and is a payment method used by Medicare to pay hospitals for inpatient services. Each DRG is assigned a set amount of payment based on the diagnosis and is not based on the actual cost of the treatments provided. Therefore, the nurse means that Medicare will pay based on a set amount for the specific condition for which the client was hospitalized.

Question 12

During an interview with a potential employee, the nurse manager tells the individual that an additional 10 percent of the hourly rate will be paid for working the 7:00 pm-7:00 am shift. What is another way the manager could have described this difference in pay?
A) "You will receive an additional 10 percent for overtime."
B) "The night shift differential is 10 percent."
C) "Your evening premium is 10 percent."
D) "You will get a 10 percent cost-of-living raise for working the night shift."

Accepted Answer

The manager could have used the term "night shift differential" to describe the additional 10 percent pay for working the 7:00 pm-7:00 am shift. This term clearly indicates that the pay difference is related to the shift timing and not extra work hours, evening hours, or cost of living.

Question 13

As a member of the budgeting committee, the nurse manager reviews the salaries for file clerks in the accounting department. These salaries should be included in which budget item?
A) The fixed cost
B) The variable cost
C) The indirect cost
D) The direct cost

Accepted Answer

1. Fixed costs are costs that will remain the same for the budget period regardless of the activity level of the organization.
2. Variable costs depend on and change in direct proportion to client volume and acuity.
3. Indirect costs are expenditures that are necessary but do not affect client care directly.
4. Direct costs are expenses that directly affect client care such as nursing personnel who provide hands-on client care.

Question 14

The chief nurse officer (CNO) is planning the budget for the coming year. A new position has been added to the nursing administration cost center. The CNO is determining how many benefit hours should be allocated for this new position. Which days should the CNO include in this calculation?
A) Sick days
B) Weekend days
C) Vacation days
D) Holidays
E) Bereavement days

Accepted Answer

Benefit hours typically include sick days, vacation days, holidays, and bereavement days, as these are paid time off benefits provided to employees. Weekend days are generally not considered benefit hours unless they coincide with a holiday or other paid time off.

Question 15

A nurse recruiter is developing a handout to take to nursing schools in hopes of recruiting graduating seniors. The salary for a newly hired nurse is $18.15 per hour with shift differential of 20 percent for working the 7:00 pm to 7:00 am shift. The salary for those who would like to work this shift would be $______ per hour.

Accepted Answer

The answer of A nurse recruiter is developing a handout...

Question 16

The medical-surgical nursing manager notices the education expenditure for the month is over budget. How should the manager deal with this difference?
A) Complete an expenditure report for the month.
B) Complete a variance report for the month's budget.
C) Forward a non-revenue-producing report to the administration.
D) Forward the expense line budget to the administration.

Accepted Answer

Completing a variance report for the month's budget will allow the nursing manager to identify where and how the education expenditure went over budget. This will help in developing strategies to prevent similar overages in the future. Completing an expenditure report for the month will only provide details on the cost and not the cause of the overage. Forwarding a non-revenue-producing report to the administration or forwarding the expense line budget to the administration without any explanation or analysis will not provide any solutions for the overage issue.

Question 17

The nurse manager is creating the budget for the next fiscal year. Because the client census has been higher in the past year, more supplies were used. Which type of cost does this reflect?
A) Fixed costs
B) Variable costs
C) Direct costs
D) Zero-based costs

Accepted Answer

The increase in supply usage due to a higher client census reflects variable costs, as they vary with the level of activity or output. Fixed costs are not affected by changes in activity or output, hence they are not reflected in this scenario. Direct costs are costs specifically associated with producing goods or providing services and may or may not be variable costs. Zero-based costs are not a recognized type of cost.

Question 18

A nurse educator is asked by the chairperson of the department to submit a list of equipment that could be used to meet the department's goals. The list includes projectors, computers, office supplies, and computer-assisted programs. How would the educator categorize the materials?
A) As an expense
B) As part of revenue
C) As part of the capital budget
D) As part of the operating budget

Accepted Answer

The equipment listed (projectors, computers, etc.) are typically considered capital assets that have a long-term useful life. Therefore, they would be part of the capital budget, rather than the operating budget or as an expense. These items would likely require a significant upfront cost and would be expected to be used for several years before needing to be replaced.

Question 19

The nurse manager of a critical care unit creates the operating budget with the knowledge that a minimum of two professional nurses must be paid per shift regardless of the patient census. Which group determines this standard?
A) Hospital administration
B) Nursing administration of the hospital
C) The Joint Commission
D) Nursing personnel of the special care units

Accepted Answer

1. The hospital makes the final determination of which staffing ratios are considered safe for their units. This determination may be made with the input of nursing administration and nursing personnel, but the final determination becomes an institutional policy.
2. This determination may be made with the input of nursing administration and nursing personnel, but the final determination becomes an institutional policy.
3. The Joint Commission assures that the institution is following its own policies.
4. This determination may be made with the input of nursing administration and nursing personnel, but the final determination becomes an institutional policy.

Question 20

A hospital's budget is incremental. Which statement by the nurse manager reflects use of this type of budget?
A) "The finance department sent me the budget worksheet with last year's expenses."
B) "We have $1,000 left in our education account that we need to spend before the year is over. Who has an idea for a class to attend?"
C) "I have to justify all our activities as if we have never done them before."
D) "I like this type of budget preparation because it is fairly simple and straightforward."
E) "In order to create next year's budget, I am to start at 80 percent of what we budgeted last year."

Accepted Answer

The answer of A hospital's budget is incremental. Which statement...

Quiz 14: Budgeting and Managing Fiscal Resources

The nurse manager is reviewing the previous month's budget and notes a favorable efficiency variance of the full-time equivalents (FTEs) . Which options may be reasons for this favorable variance?

A nursing executive is comparing the entire hospital financials for the month and notes that the medical laboratory's revenue is higher than environmental services. What is a possible explanation?

The nurse manager's goal is to adequately staff the unit and use minimal supplementary staff. The manager has added the cost of this supplementary staff to the unit's operating budget. A colleague informs the manager it should have been added to which budget?

The nurse manager identified that the census was higher than anticipated and the client acuity level was also high; however, there were fewer nursing hours paid. This variance is an example of which budgetary variance?

With the current health care industry focus on managed care, nurses must be more cost-conscious. Which option is an example of a nurse being cost-conscious?

The nurse manager tells the staff that this year's budget numbers will not change, even if census drops over the rest of the year. How should the staff interpret this information?

The nurse has received a commendable progress evaluation and will receive a 3 percent merit raise. The base salary for an RN is $48,000. Based on this information, the new projected base salary for this RN will be $_____.

Every month the chief financial officer (CFO) reviews the budget with the hospital's board of directors. The CFO requests a million dollars to purchase a new MRI (magnetic response imaging) unit for the radiology department. Which category best describes this request?

A nurse manager of a medical unit and a nurse manager of a critical care unit are discussing their personnel budgets. The medical unit budget is higher than the critical care unit budget. What are plausible reasons for this difference?

A client's spouse is concerned about the cost of hospitalization. The nurse says, "Since your spouse is on Medicare, the hospital will be paid according to the DRG." What does the nurse mean by this statement?

During an interview with a potential employee, the nurse manager tells the individual that an additional 10 percent of the hourly rate will be paid for working the 7:00 pm-7:00 am shift. What is another way the manager could have described this difference in pay?

As a member of the budgeting committee, the nurse manager reviews the salaries for file clerks in the accounting department. These salaries should be included in which budget item?

The chief nurse officer (CNO) is planning the budget for the coming year. A new position has been added to the nursing administration cost center. The CNO is determining how many benefit hours should be allocated for this new position. Which days should the CNO include in this calculation?

The medical-surgical nursing manager notices the education expenditure for the month is over budget. How should the manager deal with this difference?

The nurse manager is creating the budget for the next fiscal year. Because the client census has been higher in the past year, more supplies were used. Which type of cost does this reflect?

A nurse educator is asked by the chairperson of the department to submit a list of equipment that could be used to meet the department's goals. The list includes projectors, computers, office supplies, and computer-assisted programs. How would the educator categorize the materials?

The nurse manager of a critical care unit creates the operating budget with the knowledge that a minimum of two professional nurses must be paid per shift regardless of the patient census. Which group determines this standard?

A hospital's budget is incremental. Which statement by the nurse manager reflects use of this type of budget?