Please read the chapters, as indicated in the syllabus, regarding budgets, variance, and revenue cycle. Review the PowerPoints and articles to supplement the text material. Knowing what to look for on budgets will assist in being a better healthcare financial manager. Variance analyses help to determine the financial performance operations of an organization. Complete the following budget variance analysis problem, compute percentages, and calculate the operating income before taxes (Chapter 1) : Static Budget Variance Analysis for an Open Imaging Center Actual Amounts Incurred Static Budget Totals Budget Variance Percentage (%)=Variance/actual amount X 100 Procedures Performed 1,100 1,000 ---------------------- ------------------- Net Revenue ($400/procedure) $440,000 $400,000 ? ? Expenses Salaries & Employee Benefits ? $150,000 $20,000 [U] ? Supplies 40,000 25,000 ? ? Insurance-General 5,000 5,000 ? ? Insurance-Malpractice 10,000 10,000 ? ? Depreciation-Building 50,000 50,000 ? ? Depreciation-Equipment 100,000 100,000 ? ? Total Expenses $375,000 $340,000 ? ? Operating Income $65,000 $60,000 ? ? Profit variance=Actual profit-Static profit Revenue variance=Actual revenues-Static revenues Cost variance=Static costs-Actual costs The formula for calculating operating income is: Operating Income = Revenue - Cost of Goods Sold (COGS), Labor, and other day-to-day expenses {Operating income is also called Earnings Before Interest and Taxes (EBIT)}. Key=F=Favorable variance, while U= Unfavorable variance