Item 2019 Additional activity % inc.Increase 2020

Budget activity 2020 in cost Budget

Nursing pay3 000 000500 000 3105 000 3 605 000

Non pay cost100 000

Medical pay760 000

Management 300 000

Consumables340 000

Admin pay196 000

Total4 696 000

Additional information:

In the year 2020:

Bed days planned are 35 000

Nursing and medical pay are expected to rise by 3%

Management and administration pay are not expected to rise

All other costs are expected to rise by 5% Assume that management costs are fixed but that all other costs are variable. Assume also that all pay rises take effect on 01 January 2020.

Required:

2.1. Calculate the increases in activity and in cost levels to arrive at the budget for the year 2020. (20)

2.2. Explain how an effective system of budgetary control can help to uncover mismanagement, fraud or corruption. (10)

Can you please show how to get to the answer especially 2.1