Problem 3

The following is information from the most recent operating budget for Riverview Clinic. The capitated plan for Riverview Clinic has 30,000 members that each pay a flat amount per month of coverage.

	Static Budget	Flexible Budget	Actual Results
Patient visits - FFS	9,000		8,821
Patient visits - Capitated Plan	7,500		7,215
Revenues - FFS	$1,575,000		$1,490,749
Revenues- Capitated Plan	900,000		900,000
Total Revenues	$2,475,000		$2,390,749
Variable Costs	1,320,000		1,314,952
Contribution Margin	1,155,000		1,075,797
Fixed Costs	985,000		980,120
Operating Income	$170,000		$95,677

Prepare a flexible budget for Riverview clinic by filling in the Flexible Budget column with the appropriate amounts.

What is the overall profit variance for Riverview Clinic? Is it favorable or unfavorable?

What is the revenue volume variance for Riverview Clinic? Is it favorable or unfavorable?

What is the revenue price variance for Riverview Clinic? Is it favorable or unfavorable?

What is the cost volume variance for Riverview Clinic? Is it favorable or unfavorable?

What is the cost management variance for Riverview Clinic? Is it favorable or unfavorable?