Instructions state that the capital budget is zero-based, requiring justification of any proposed capital expenditures. You have listed some justifications for a new digital dictation system for the upcoming year in Figure 6-3. You need to complete the Capital Expenditure Approval Form shown in Figure 6-4 and return it to administration with your budget.

As the HIM director, you know that after administrations review of submitted department budgets, only those foreseen as most important will be approved and funded. For this exercise, include the dictation system in your capital budget as if it had been approved.

Capital Equipment
Item: New Dictation System
Cost of System	$65,000.00
Annual Income Produced	$20,000.00
Depreciation over 5 years

Figure 6-3: Justification for New Transcription System

"Capital Expenditure Approval Form"
Description: Digital Dictation System
Type of Expenditure: Capital	Replacement: Y		New: N
Briefly define function of capital expenditure: Perfecto Digital Dictation System has state of art capabilities with a 15-year full warranty. The system is capable of 42 simultaneous dictators to call in, while 16 transcribers can access system for output. Access can be made from direct-wired dictation units, phone call-in, or cellular call-in with security of proper access codes. There is functionality to call in and listen by authorized users with secure access passwords (numbers). User-friendly edit functions are available to authorized users for backup, stop, record-over, add-in, and save functionalities. The system has monotype audio technology for clear recording of dictator. In addition, the new system has excellent functionality for queuing STAT and workflow of medical dictations for transcriptionist. This will equate to better prioritization and turnaround of medical dictations.
Briefly describe why item is needed (students may choose to add variation to justification): The current dictation system is 15 years old and requires service a several of times per month causing the system to incur an average of fifty minutes of downtime. The system is not capable of having simultaneous dictators. The medical staff has complained of not being able to access the system due to getting busy signals. The system does not have a method of effectively prioritizing STAT and workflow of dictations for transcriptionists. Dr. Delinco complains that his operative reports are taking 1 to 1 weeks to be typed. The system does not have the technology that will enable physicians to call in and listen to dictations. Dr. Smith has complained that the current system does not allow him to call in and listen to his dictations as an alternative to when the report is not available on the patient chart. Prioritizing reports among the transcriptionists is not as automated as newer systems allow, therefore consuming transcribers time and impacting production.

Financial Analysis Annual A) Gross Revenue B) Less Depreciation C) Gross Profit D) Asset Cost : E) Return on Asset F) Payback-years Requested by: _(Department Manager) Approved by: (Operations Manager) Date (Finance Manager) Date (Administrator) Date