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Budgets

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Submitted By jenniferm1985
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The line-item format is really quite simple and straightforward. Line items are mutually exclusive. Each line item is clearly defined. All revenues and expenditures must be accounted for in a line-item budget. Totals of all expected revenues must equal totals of all expenditures.
The line-item budget allows spending to be monitored in relation to amounts allocated but does not provide information that can be used to determine efficiency, effectiveness, productivity, or quality. A business manager, accountant, or bookkeeper typically has responsibility for monitoring a line-item budget. As funds are spent they are accounted for within the established categories. At the end of each month the budget manager calculates the ratio of budget allocated to budget spent in each category to see how it compares to the percentage of the fiscal year that has elapsed. When spending patterns in any one category are out of line with where they should be at that point in the fiscal year, a warning should be sent to the responsible managers and administrators. The Pinetree
County Senior Center’s annual budget shown in the following section is an example of a line-item budget.
Funding sources frequently require that a budget-justification sheet be attached to the budget. A budget-justification sheet is used to explain how each line item is calculated. A sample budget-justification sheet is illustrated in Table 8.3.
Functional Budgeting
Moving to the next level of complexity, functional budgeting requires combining program and service data with budget data. With functional budgeting, no longer are simple budget categories the focus of the system. Rather, total program-cost figures are calculated and used as a basis for determining the cost per unit of service for each program. As discussed in the previous chapter, units can be defined in terms of time, episode, or...

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