Budgeting Harvard Case Solution & Analysis

Contribution Objectives of a division:

A number of options can be considered to focus on the target to reach its contribution objectives.  This includes:

No breakdown of Variables:

There should not be any criteria of variable breakdown as it can create more difficulty in balancing of the gain or increase the range of profit. Otherwise, improper variables lead to some of the unexpected loss that may result in the unbalanced budgeting. It is important to keep an eye on the budgeting criteria and the outcomes followed by the process. This will help to encounter the problem before it’s too late to be settled.

Increased Revenue:

In order to obtain an increased amount of revenue, the payment systems should not be interlinked. Each division should set his way of keeping its revenues on level, it would be easier to have separate measures to easily combine at last which can figure out the differences in short time without struggling one.

Protection against Budget Crunch:

The low cost of the services provided to the patients cause any organization to face financial difficulties which may lead to budget crunch. It is neither good for the labour cost nor the volume of the budget to be over. The cost of the services need to be revised to overcome the fear from having a complete fiscal crunch. (Chowdhury, 2015)

Calculate income and Expenses:

The calculation of the income and the amount of expense should be up to date that helps you to be aware of the extra and less needed expenses. The prohibition of extra expenses that are neither a basic nor an important need, gives an amount to be saved. This helps in better determination of the fixed costs and the better revenue to be obtained. (Fay, 2017)

Option differentiation:

The difference in the options between the Clinical departments such as Paediatrics and the ancillary departments like chemistry lab are:

Clinical Departments:

With respect to the Budget Plan, the complete information about the utilization of resources, the income, expenses and revenues are a part of the clinical department. The employees working in these divisions are responsible for all the budgeting, as it is one of their responsibilities to have updated information about all the gross and net revenues. It is important to keep any organization from the crunching of the budget before time.

Ancillary Departments:

The ancillary department objectives differ from the clinical departments as they are provided with particular variables that have to be followed. They should not let variables to breakdown instead they can be increased but with proper estimation. Similarly, the other point to consider is the number of cases with their appropriate variable cost rather the use of average cost.

Responsibility Centre Choice:

The selection of the specific responsibility centre division is mainly affected by the options to achieve desired contribution objective by the type of responsibility given based on the ability of employee. As every individual has his own zone of expertise which can possess either good or bad impact on the growth of the organization. The better decision is to assign work to the employee so that could provide the organization with better outcomes.

Changes in Budgeting and Control System:

Following the above mentioned measures can be better used to improve any budgeting system to have a good control over its expenses and the amount earned excluding all the expenses from the Gross revenue to determine the actual revenue obtained. The budgeting that has been made by Mr Grant to create a follow up in the operating budget is near to perfection having some exceptions only in one of the division and the ancillary department that created a great impact on the overall value. The Exhibit 3 and 5 should be revised to better understand the problem and come up with a better solution.


It is to conclude that as  NLMC in Milwaukee is one of the top ranking hospital in comparison to Wisconsin hospital. Due to some budgeting issues, the hospital faced some loss that if not covered will increase by each passing year. The budgeting plan to cover up the last year loss to meet up its desired profit value can be achieved by setting of proper goals. The MD, Mr Grant has generated a new budgeting plan to be followed by the hospital to meet its desired goals. The results of the plan interpreted were significant to some extent but even though the target was not reached. Some exceptional measures should need to be taken to meet its goal with no exceptions.

Appendix 1

Appendix 2

Appendix 3

DepartmentOriginal quantity per case Original Quantity Revised Quantity per caseRevised Quantity % change Quantity per case% change Quantity
Chemistry Lab Tests – Departmental Total  



















Original and revised Quantity in amount 











68, 414









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