1. Explain the differences between operating budgets and capital expenditure budgets. How are they used? Operating budgets are budgets that primarily deal with the day-to-day operations of a facility. This can include wages, utilities, rent, and items purchased with the intention of lasting less than a year (Johnston, n.d.). This type of budget provides the necessary information regarding the available cash needed to operate the facility during a fiscal year. Capital expenditure budgets focus on longer-term items such as equipment or real estate. As stated by Johnston (nd), it is necessary to have an investment budget to ensure the continued growth of the business. You accomplish this task by purchasing assets that produce income. The capital expenditure budget can potentially cover a period of five to ten years (Baker & Baker, 2014, p.174). Items included in the capital expenditure budget may also include loan interest and bondholder interest. The operating budget and the capital budget interact with each other. To illustrate an example: a healthcare establishment purchases a chemistry analyzer for its clinical laboratory. The chemistry analyzer is included in the capital expenditure budget, but maintenance of the analyzer is included in the operating budget. The capital expense is the chemical analyzer, but the materials used to maintain the chemical analyzer are operational expenses. Baker, J.J. & Baker, R.W. (2014). Health Care Financing Basic Tools for Nonfinancial Managers (4th ed.). Burlington, MA: Jones & Bartlett Learning Johnston, K. (n.d.). Differences and similarities between capital budgeting and operational budgeting. Chron.com. Retrieved from http://smallbusiness.chron.com/differences-similarities-capital-...... middle of document ......new parser versus current parser?11. Is the purchase a real necessity or simply a wish of the clinical laboratory?12. Do we have a backup analyzer? I'm sure there would be more questions to follow, but this would be a good start to begin the decision-making process regarding an expensive investment and what needs would be met with the purchase. , JJ and Baker, RW (2014). Health Care Financing Basic Tools for Nonfinancial Managers (4th ed.). Burlington, MA: Jones & Bartlett LearningAverkamp, ​​​​H. (nd). What is a static budget? AccountingCoach.com. Retrieved from http://www.accountingcoach.com/blog/what-is-a-static-budgetJohnston, K. (nd). Differences and similarities between capital budgeting and operational budgeting. Chron.com. Retrieved from http://smallbusiness.chron.com/differences-similarities-capital-operational-budgeting-33149.html.