NR 533 – Financial Management in
Healthcare Exam | Updated 2025/2026
Quetions & Answers
Budgeting (Questions 1-12)
Question 1
A nurse manager is preparing the annual operating budget for a 30-bed medical-surgical unit.
Which budgeting method involves justifying all expenses from zero each period, regardless of
prior allocations?
A. Incremental budgeting
B. Flexible budgeting
C. Zero-based budgeting
D. Performance budgeting
C. Zero-based budgeting
Rationale: Zero-based budgeting requires reevaluating and justifying every expense anew,
promoting efficiency and alignment with current goals. In healthcare, it counters incremental
creep but is resource-intensive; ideal for cost-control in volatile environments like post-2025
reimbursement cuts.
Question 2
During variance analysis, a unit's actual labor costs exceed the budgeted amount by 15%. What
is the primary nursing action to address this unfavorable variance?
A. Reduce non-essential supplies
B. Implement mandatory overtime restrictions
C. Request additional capital funding
D. Ignore if revenue offsets
B. Implement mandatory overtime restrictions
,Rationale: Unfavorable labor variances often stem from overtime; restricting it while optimizing
scheduling restores balance. Healthcare budgeting emphasizes controllable costs like staffing,
per AHRQ guidelines, to maintain fiscal integrity without compromising care.
Question 3
A hospital adopts a flexible budget for its emergency department. How does this differ from a
static budget in responding to patient volume fluctuations?
A. Fixed expenses only
B. Adjusts for activity levels like admissions
C. Ignores variances
D. Annual review only
B. Adjusts for activity levels like admissions
Rationale: Flexible budgets scale revenues/expenses with volume (e.g., +10% visits = +5%
staffing), enabling accurate variance analysis. In 2025 healthcare, with ED surges from aging
populations, this supports adaptive planning per CMS value-based care.
Question 4
In preparing a capital budget, a nurse leader prioritizes purchasing new IV infusion pumps.
What financial metric justifies this based on long-term savings?
A. Payback period of 2 years
B. Net present value (NPV) >0
C. Internal rate of return (IRR) < cost of capital
D. Break-even analysis
B. Net present value (NPV) >0
Rationale: Positive NPV indicates the investment's discounted cash inflows exceed outflows,
confirming value. For healthcare capital like pumps reducing errors (per 2026 Joint Commission
standards), NPV ensures alignment with organizational ROI goals.
Question 5
A unit's revenue budget projects $2.5 million from 10,000 patient days at $250/day. If actual
days are 9,500, what is the volume variance impact?
A. Favorable $125,000
B. Unfavorable $125,000
C. Neutral
, D. Price variance only
B. Unfavorable $125,000
Rationale: Volume variance = (actual - budgeted volume) × budgeted rate = (9,500 - 10,000) ×
$250 = -$125,000 unfavorable. In nursing budgets, this highlights underutilization, prompting
marketing or efficiency reviews per FASB standards.
Question 6
What is the primary advantage of participatory budgeting in a nursing department?
A. Top-down control
B. Increased staff buy-in and accountability
C. Faster approval
D. Reduced forecasting errors
B. Increased staff buy-in and accountability
Rationale: Involving frontline nurses fosters ownership, improving compliance with fiscal goals.
2025 AONE principles emphasize this for retention amid staffing shortages, though it risks bias
toward short-term needs.
Question 7
A nurse manager forecasts next year's supply budget using historical data adjusted for 5%
inflation. What method is this?
A. Zero-based
B. Incremental
C. Rolling
D. Activity-based
B. Incremental
Rationale: Incremental budgeting adds a percentage to prior year, simplifying but risking
unchecked growth. In healthcare, with 2026 supply chain volatility, it's common but requires
variance checks to avoid deficits.
Question 8
In a responsibility center budget, the nursing unit is classified as what type, controlling costs but
not revenue?
A. Revenue center
Healthcare Exam | Updated 2025/2026
Quetions & Answers
Budgeting (Questions 1-12)
Question 1
A nurse manager is preparing the annual operating budget for a 30-bed medical-surgical unit.
Which budgeting method involves justifying all expenses from zero each period, regardless of
prior allocations?
A. Incremental budgeting
B. Flexible budgeting
C. Zero-based budgeting
D. Performance budgeting
C. Zero-based budgeting
Rationale: Zero-based budgeting requires reevaluating and justifying every expense anew,
promoting efficiency and alignment with current goals. In healthcare, it counters incremental
creep but is resource-intensive; ideal for cost-control in volatile environments like post-2025
reimbursement cuts.
Question 2
During variance analysis, a unit's actual labor costs exceed the budgeted amount by 15%. What
is the primary nursing action to address this unfavorable variance?
A. Reduce non-essential supplies
B. Implement mandatory overtime restrictions
C. Request additional capital funding
D. Ignore if revenue offsets
B. Implement mandatory overtime restrictions
,Rationale: Unfavorable labor variances often stem from overtime; restricting it while optimizing
scheduling restores balance. Healthcare budgeting emphasizes controllable costs like staffing,
per AHRQ guidelines, to maintain fiscal integrity without compromising care.
Question 3
A hospital adopts a flexible budget for its emergency department. How does this differ from a
static budget in responding to patient volume fluctuations?
A. Fixed expenses only
B. Adjusts for activity levels like admissions
C. Ignores variances
D. Annual review only
B. Adjusts for activity levels like admissions
Rationale: Flexible budgets scale revenues/expenses with volume (e.g., +10% visits = +5%
staffing), enabling accurate variance analysis. In 2025 healthcare, with ED surges from aging
populations, this supports adaptive planning per CMS value-based care.
Question 4
In preparing a capital budget, a nurse leader prioritizes purchasing new IV infusion pumps.
What financial metric justifies this based on long-term savings?
A. Payback period of 2 years
B. Net present value (NPV) >0
C. Internal rate of return (IRR) < cost of capital
D. Break-even analysis
B. Net present value (NPV) >0
Rationale: Positive NPV indicates the investment's discounted cash inflows exceed outflows,
confirming value. For healthcare capital like pumps reducing errors (per 2026 Joint Commission
standards), NPV ensures alignment with organizational ROI goals.
Question 5
A unit's revenue budget projects $2.5 million from 10,000 patient days at $250/day. If actual
days are 9,500, what is the volume variance impact?
A. Favorable $125,000
B. Unfavorable $125,000
C. Neutral
, D. Price variance only
B. Unfavorable $125,000
Rationale: Volume variance = (actual - budgeted volume) × budgeted rate = (9,500 - 10,000) ×
$250 = -$125,000 unfavorable. In nursing budgets, this highlights underutilization, prompting
marketing or efficiency reviews per FASB standards.
Question 6
What is the primary advantage of participatory budgeting in a nursing department?
A. Top-down control
B. Increased staff buy-in and accountability
C. Faster approval
D. Reduced forecasting errors
B. Increased staff buy-in and accountability
Rationale: Involving frontline nurses fosters ownership, improving compliance with fiscal goals.
2025 AONE principles emphasize this for retention amid staffing shortages, though it risks bias
toward short-term needs.
Question 7
A nurse manager forecasts next year's supply budget using historical data adjusted for 5%
inflation. What method is this?
A. Zero-based
B. Incremental
C. Rolling
D. Activity-based
B. Incremental
Rationale: Incremental budgeting adds a percentage to prior year, simplifying but risking
unchecked growth. In healthcare, with 2026 supply chain volatility, it's common but requires
variance checks to avoid deficits.
Question 8
In a responsibility center budget, the nursing unit is classified as what type, controlling costs but
not revenue?
A. Revenue center
