Three Rivers Dental Associates (TRDA) is a large dental practice in Pittsburgh. The firm’s controller is preparing the budget for the next year. The controller projects a total of 48,000 office visits, to be evenly distributed throughout the year. Eighty percent of the visits will be half-hour appointments, and the remainder will be one-hour visits. The average rates for professional dental services are $ 60 for half-hour appointments and $ 105 for one-hour office visits. Ninety percent of each month’s professional service revenue is collected during the month when services are rendered, and the remainder is collected the month following service. Uncollectible billings are negligible. TRDA’s dental associates earn $ 90 per hour. TRDA uses activity-based budgeting to budget office overhead and administrative expenses. Two cost drivers are used: office visits and direct professional labor. The cost-driver rates are as follows:

Patient registration and records...............................$ 3.00 per office visit (of any length)

All other overhead and administrative expenses.....$ 7.50 per direct professional labor hour

Required:

Prepare the following budget schedules.

1. Direct- professional- labor budget for the month of June.

2. Cash collections during June for professional services rendered during May and June.

3. Overhead and administrative expense budget for the month of June.

4. Construct an Excel spreadsheet to solve all of the preceding requirements. Show how the solution will change if the following information changes: a total of 54,000 office visits are expected for the year and 70 percent of the office visits are half- hour appointments.