Finance - Rivington Hospital Essay Example | Topics and Well Written Essays - 1500 words

Finance - Rivington Hospital - Essay Example..6 Heating and Power be.6 Conclusion.6 References.7 Introduction The performance of any department can be evaluated in a enumerate of ways, among which the fulfilment of budgets is considered vital. This report focuses on evaluating the performance of the lavation department based on revised budget estimates. The report begins by examining the effects of the existing budget on the behaviour of the laundry supervisor. After this, it outlines the antithetical criteria for the investigation of variances, including a redrafting of the memo and revision of the existing budget, before reaching conclusions. a) Effects on the behaviour of the Laundry Supervisor There may be various effects on the behaviour of the laundry supervisor because of the imposition of the budget. The existing budget has several negative elements that could lead to the laundry supervisor reacting and behaving in an irrational manner. ... The second negative effect on the supervisors productivity is that the budget was brisk as if to pressurise her, rather than to motivate her, because despite the increasing volume and turnover of the hospital the budget was set in a rigid manner using the old budgeted activity levels. It is also eventful to note that the quality of the laundry departments performance may be hampered from now on, as the supervisor might try to achieve the budget targets irrespective of whether quality is assured or not. deception could also become a problem, as if her only objective is to meet the targets set out in the budget, she may attempt to fulfil them by adopting negative tactics. There are costs involved that impart definitely increase because of growth in the activity level, which means the laundry supervisor will not have any control over them. Therefore, this could ultimately lead her to deploy negative tactics in the form of misrepresentation, falsification and poor quality control measures. b) Criteria for Invest igation of Variances The criteria for evaluating whether variances ought to be investigated or not should be based upon the nature of the costs incurred by the different departments. The basic criterion is to divide them into controllable and unwieldy costs. The controllable costs should be aligned with the actual activity level of the department, as they change concord to variation in the activity level therefore, they should be investigated if there is a significant amount of variation. In this way, Rivington Hospital has the choice of whether to use the absolute or relative method to investigate the negative variances. The new(prenominal) types of costs are uncontrollable costs, and are incurred