Instead of the results in problem 8.4, consider the results reported below:

Assume the results reported in problem 8.4 hold, except that a difference existed among budgeted (static) enrollment and realized enrollment. The corrected results are presented above.

a. Construct Carroll’s flexible budgets for 2020.

b. What are the profit variance, revenue variance, and cost variance?

c. Focus on the revenue side. What is the volume variance? The price variance? Break the volume variance into enrollment and utilization components. How does your answer here differ from your corresponding answer to problem 8.4?

d. Now consider the cost side. What are the volume and management variances? Break down the management variance into labor, supplies, and fixed costs variances.

e. Interpret your results. In particular, focus on the differences between the variance analysis here and the one in problem 8.4.

Problem 8.4

Refer to Carroll Clinic’s 2020 operating budget contained in exhibit 8.3. Instead of the actual results reported in exhibit 8.4, assume the results reported below:

Exhibit 8.3

Exhibit 8.4

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I. Volume: Carroll Clinic: New 2020 Results A. FFS 34,000 visits B. Capitated lives 31,000 members Number of member-months 372,000 Actual utilization per member-month 0.11613 Number of visits 43,200 visits C. Total actual visits 77,200 visits