Central County Public Clinic is a free outpatient clinic for public assistance patients. Among other services, the clinic provides visiting nurses for elderly patients in their homes. A homemaker who cleans and performs other household tasks accompanies each nurse. When the nurses are not visiting clients, they work at the office preparing for visits. When the homemakers complete their visits, they go home.

Each year, the clinic receives a budget allotment from Central County. The county does not allow the clinic to spend more than this allotment. The clinic, in turn, allocates its budget among its various programs. The visiting nurse program was authorized (and spent) $229,583 in 20X8 and $258,281 in 20X9.

The nursing staff received a 5% increase in salary one-third of the way through 20X9. The homemakers did not receive an increase in wages in 20X8 or in 20X9. The prices of medical supplies increased about 2% during 20X9 compared to 20X8. The prices of cleaning supplies were relatively constant across the two years.

Transportation is provided by the nurses, who are reimbursed $0.40 per mile.

REQUIRED

A. In this problem you are not given a budget for 20X9. If you want to evaluate performance of the 20X9 clinic, what can you use as the basis of a flexible budget to develop a benchmark?

B. Prepare a schedule to evaluate the performance of this program in 20X9 using the benchmark suggested in part (A).

C. If you were the general manager of the clinic, what would you like to discuss with the head of the Visiting Nurse Program concerning the 20X9 results? Explain.

D. How many patients should have been served in 20X9 for $258,281 if costs had been under control?

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CENTRAL COUNTY PUBLIC CLINIC: VISITING NURSE PROGRAM 20X8 20X9 $145,019 71,500 21,402 9,216 11144 $258,281 5,101 $50.63 Nurses Homemakers Medical supplies Cleaning supplies Transportation Total expenditures Home visits $135,378 60,046 18,197 6,894 $229,583 4,312 $53.24 Average cost per home visit