Budget key: (NE) Number of surgeries (PR) Patient revenue (SE) Salary expense (NE) Nonsalary expense (Profit)
Simple NS 1,200 PR $2,400 SE $1,200 NE $600 Proft $600
Flexible NS 1,300 PR $2,600 SE $ 1,300 NE $ 650 Profit $ 650
Actual NS 1,300 PR $2,535 SE $ 1,365 NE $ 585 Profit $ 585
Carroll Clinic: New 2012 Results
I. Volume(NumberofVisits)
Payer A: 11,000
Payer B: 12,000
Total: 23,000
II. Reimbursement(PerVisit)
PayerA $ 95
PayerB $ 95
III. Costs
Variable Costs:
Supplies: $ 350,000
Fixed Costs:
abor: $ 1,000,000
Overhead: 500,000
Total: $1,500,000
IV. Forecasted P&L Statement
Revenues:
Payer A :$1,045,000 Payer B: 1,140,000 Total revenues: $2,185,000
Variable costs: $ 350,000
Fixed: 1,500,000
Total: $1,850,000
Profit: ($ 335,000)
In an Excel spreadsheet and show your formula in the spread sheet
a. What are the profit, revenue, and cost variances based on the simple (Exhibit 6.2) budget?
b. Construct Carroll’s flexible budget for 2012.
c. What are the profit, revenue, and cost variances based on the flexible budget?
d. Interpret your results. In particular, focus on the differences between the variance analysis here and the Carroll Clinic illustration presented in the chapter.