Various budget approaches play an important role in resource allocation in human service organizations. You are the administrator for an Orthopedic surgery practice you are preparing a budget matrix for MRI services. The matrix budget consists of line-item, functional, and program budgets. Cost of purchasing an MRI machine: $1,200,000

Annual cost of hiring new radiologist to provide professional service: $500,000
Annual maintenance and warranty: $30,000
Additional office space to accommodate MRI: 5,000 SF; rent is $20/SF
Hiring four additional technical staff at $60,000 per FTE
Other operating expenses: $50,000
Projected number of MRI procedures per year: 10,000

What is your question?

To create a budget matrix for MRI services in an Orthopedic surgery practice, you will need to consider various budget approaches and allocate resources accordingly. Here's how you can break down the budget components based on the provided information:

1. Line-Item Budget:
A line-item budget involves listing individual expenses and their corresponding costs. In this case, the line-item budget would include the following:

- Cost of purchasing an MRI machine: $1,200,000
- Annual cost of hiring a new radiologist: $500,000
- Annual maintenance and warranty: $30,000
- Additional office space rent (5,000 SF at $20/SF): $100,000
- Hiring four additional technical staff (4 FTE at $60,000 per FTE): $240,000
- Other operating expenses: $50,000

Total line-item budget: $2,120,000

2. Functional Budget:
A functional budget categorizes expenses according to the functions or departments within the organization. In this case, the functional budget for the MRI services may include:

- Radiology Department:
- Cost of purchasing an MRI machine: $1,200,000
- Annual cost of hiring a new radiologist: $500,000
- Annual maintenance and warranty: $30,000

- Operations Department:
- Additional office space rent (5,000 SF at $20/SF): $100,000
- Hiring four additional technical staff (4 FTE at $60,000 per FTE): $240,000
- Other operating expenses: $50,000

3. Program Budget:
A program budget focuses on specific programs or services offered by the organization. In this case, the program budget would be for MRI services and would include all the expenses related to MRI services, such as the cost of purchasing the MRI machine, hiring a radiologist, maintaining the machine, and operating expenses.

- Annual cost of MRI services:
- Cost of purchasing an MRI machine: $1,200,000 (amortized over the machine's expected lifespan)
- Annual cost of hiring a new radiologist: $500,000
- Annual maintenance and warranty: $30,000
- Additional office space rent (5,000 SF at $20/SF): $100,000
- Hiring four additional technical staff (4 FTE at $60,000 per FTE): $240,000
- Other operating expenses: $50,000

Total program budget: $2,120,000 (annual cost)

Considering the projected number of MRI procedures per year (10,000), you can divide the program budget by the projected number of procedures to determine the cost per procedure.

Cost per MRI procedure: $212 (approximate cost based on the provided budget)

By utilizing this budget matrix, you can effectively allocate resources and make informed decisions regarding MRI services in your Orthopedic surgery practice.