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    Operating Budget, Flexible Budget: Carroll Clinic

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    2008 Carroll Clinic Operating Budget:

    I. Volume (number of visits)
    Payer A 9000
    Payer B 12,000
    Total 21,000
    II. Reimbursement (per visit)
    Payer A $ 100
    Payer B $ 90
    III. Costs
    Variable costs:
    Supplies $ 315,000
    Fixed costs:
    Labor $1,035,000
    Overhead 500,000
    Total $1,535,000
    IV. Forecasted P&L Statement
    Revenues:
    Payer A $ 900,000
    Payer B $ 1,080,000
    Total Revenue $1,980,000
    Variable costs $315,000
    Fixed costs $1,535,000
    Total costs $1,850,000
    Profit $ 130,000

    Carroll Clinic Actual Results 2008

    I. Volume
    Payer A 11,000
    Payer B 12,000
    Total 23,000
    II. Reimbursement
    Payer A $ 95
    Payer B $ 95
    III. Costs
    Variable costs:
    Supplies $ 350,000
    Fixed costs:
    Labor $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 costs $1,500,000
    Total $1,850,000
    Profit $ 335,000

    a. What are the profit, revenue, and cost variances based on the simple budget?
    b. Construct a flexible budget for 2008.
    c. What are the profit, revenue and cost variances based on the flexible budget?
    d. Interpret the results. In particular, focus on the differences between the variance analysis here and the Carroll Clinic illustration presented in the chapter.

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    https://brainmass.com/business/budgets/operating-budget-flexible-budget-carroll-clinic-410716

    Solution Summary

    Profit, revenue, cost variances, flexible budgets, and variance analysis are investigated in this Excel solution.

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