Children's Hospital of the King's Daughter in Norfolk, Virginia, introduced a new budgeting method that allowed the hospital's annual plan to be updated for changes in operating plans. For example, if the budget was based on 400 patient-days and the actual count rose to 450 patient-days, the variable costs of staffing, lab work, and medication costs could be adjusted to reflect this change. The budget manager stated,
- What budgeting methods are being used under the new approach?
- Why are these methods superior to the former approaches?