Contemporary Issues in Nursing Related

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Organizations measure the effectiveness of their budgets by examining actual revenues and expenditures versus:

  • A. planned variances.
  • B. incremental budgets.
  • C. productivity metrics.
  • D. expected performance.
Correct Answer: A

Rationale: The correct answer is A: planned variances. Organizations compare actual revenues and expenditures to planned variances to measure budget effectiveness. Planned variances show the differences between the budgeted amounts and the actual results, highlighting areas of over or underperformance. This analysis helps organizations identify reasons for deviations and adjust future budgets accordingly.

Explanation for other choices:
B: Incremental budgets focus on adjusting previous budgets by a fixed amount, not on comparing actual versus planned amounts.
C: Productivity metrics measure the efficiency of resources used, not specifically related to budget effectiveness.
D: Expected performance is a vague term that does not directly address comparing actual versus planned financial data.