1. Lab Finance, Budgets, and Inventory

2. What is a Budget?
A financial report containing estimates of incomes and expenses
A plan for coordinating income and expenses

3. Budget Process Budget Phases Phase I Development of Goals
Phase II Budget Assumptions
Phase III Forecast of Expenses
Phase IV Monitoring

4. Phase I: Development of Goals
Hospital Initiatives
Reduce supply expense
Increase testing volume
Department Initiatives
Buy a new analyser
Paint the department

5. Phase II: Budget Assumptions
Past Earnings (revenue)
Past Volume
Past Expenses
Salaries
Supplies
Other

6. Phase III: Forecast Planned Earnings (revenue) Planned Volume
Planned Expenses
Salaries
Supplies
Other

7. Direct vs. Indirect Costs
Direct Costs – costs that directly impact the budget
Indirect Cost – costs that do not directly impact the budget

8. Fixed vs. Variable Cost
Fixed Cost – Amount of expense remains constant
Car payment
Rent
Variable Cost – Amount of expense changes
Salaries
Supplies

9. Capitol Expense
An investment to acquire or improve an asset, usually over a defined dollar amount
Buildings/Land
New equipment
Renovations
Expensed over a period of time (depreciation)

10. Phase IV: Monitor Review monthly for variances
Explain any variances from budget
Make adjustments

11. Storeroom Management Inventory Flows FIFO – First in, First out
LIFO – Last in, First out

12. Inventory Management Set Min/Max Levels
Minimum amount of inventory on hand
Also called, reorder level
Based on lead time – shipping time
Maximum amount of inventory on hand
Eliminate expired supplies
Reduce inventory expense

13. Min/Max
Pipette Tips
Min – 3 boxes
Max – 11 boxes
Use 2 boxes per week Ship time is 1 week Order one time per month 1 box buffer
Max
(2x4) +2+1=11
Min
2+1=3

14. Min/Max?
Pipette Tips
Min – 4 boxes
Max – 16 boxes
Use 3 boxes per week Ship time is 1 week Order 1 time per month One box buffer
Max
(3x4)+3+1=16 boxes
Min
3+1=4 boxes