Problem 8.7

Construct Chelsea Clinic's operating budget for 2015. a. b. Discuss how each key budget assumption might result in a budget variance, and name the variance that would be used to examine results associated with each assumption. 8.7 Refer to Problem 8.6. Chelsea Clinic's actual results for 2015 are shown in the table below Total FFS Visit Volume 100,000 visits Payer Mix: Blue Cross 40% Highmark 60% Reimbursement Rates: $28 per visit Blue Cross $18 per visit Highmark Variable Costs Resource Inputs: 50,000 total hours Labor 150,000 total units Supplies (continued) ns baa AM psbLM care Finance (continued from previous page) Resource Input Prices: $28.00 per hour Labor 00 00 $1.50 per unit Supplies Fixed Costs (overhead, plant, and equipment) $500,000 a. Construct Chelsea Clinic's flexible budget and actual operating results for 2015 b. What are the profit variance, revenue variance, and cost variance c. Focus on the revenue side. What is the volume variance? The price Par variance? we d. Now consider the cost side. What are the volume and management the variances? Break down the management variance into labor, supplies, and fixed costs variances. Interpret your results. tior org imp e. sio Resources pra anc Barr, P. 2005. "Flexing Your Budget." Modern Healthcare (September 12): 24-26 Can Reduce the Pain." Healthcare Financial Management (March): 56-59 Sur Budget: How Budget Workshops vali inf Bradley, L. S. 2008. "Budgeting Of Refusing or to Cardamone, M. A., M. Shaver, and R. Worthman 2004 "Business Planning: Reasons ana Definis ill:40-4 Chapter 8: Financial Planning and Budgeting 301 86 Chelsea Clinic projected the following budget information for 2015: hliqn uom 90,000 visits Total FFS Visit Volume Payer Mix:02.12 Blue Cross0088 br 40% P (109 60% Highmark Reimbursement Rates: Blue Cross v 5 25 per visit $20 per visit Highmark Osin db Variable Costs Resource Inputs: 48,000 total hours Labor 100,000 total units Supplies Resource Input Prices: $25.00 per hour Labor $1.50 per unit Supplies Fixed Costs (overhead, plant, and equipment) $500,000 a. Construct Chelsea Clinic's operating budget for 2015. n key budget assumption might result in a budget variance, and name the variance that would be used to examine results associated with each assumption. b. Discuss how 8.7 Refer to Problem 8.6. Chelsea Clinic's actual results for 2015 are Shown in the table below. Construct Chelsea Clinic's operating budget for 2015. a. b. Discuss how each key budget assumption might result in a budget variance, and name the variance that would be used to examine results associated with each assumption. 8.7 Refer to Problem 8.6. Chelsea Clinic's actual results for 2015 are shown in the table below Total FFS Visit Volume 100,000 visits Payer Mix: Blue Cross 40% Highmark 60% Reimbursement Rates: $28 per visit Blue Cross $18 per visit Highmark Variable Costs Resource Inputs: 50,000 total hours Labor 150,000 total units Supplies (continued) ns baa AM psbLM care Finance (continued from previous page) Resource Input Prices: $28.00 per hour Labor 00 00 $1.50 per unit Supplies Fixed Costs (overhead, plant, and equipment) $500,000 a. Construct Chelsea Clinic's flexible budget and actual operating results for 2015 b. What are the profit variance, revenue variance, and cost variance c. Focus on the revenue side. What is the volume variance? The price Par variance? we d. Now consider the cost side. What are the volume and management the variances? Break down the management variance into labor, supplies, and fixed costs variances. Interpret your results. tior org imp e. sio Resources pra anc Barr, P. 2005. "Flexing Your Budget." Modern Healthcare (September 12): 24-26 Can Reduce the Pain." Healthcare Financial Management (March): 56-59 Sur Budget: How Budget Workshops vali inf Bradley, L. S. 2008. "Budgeting Of Refusing or to Cardamone, M. A., M. Shaver, and R. Worthman 2004 "Business Planning: Reasons ana Definis ill:40-4 Chapter 8: Financial Planning and Budgeting 301 86 Chelsea Clinic projected the following budget information for 2015: hliqn uom 90,000 visits Total FFS Visit Volume Payer Mix:02.12 Blue Cross0088 br 40% P (109 60% Highmark Reimbursement Rates: Blue Cross v 5 25 per visit $20 per visit Highmark Osin db Variable Costs Resource Inputs: 48,000 total hours Labor 100,000 total units Supplies Resource Input Prices: $25.00 per hour Labor $1.50 per unit Supplies Fixed Costs (overhead, plant, and equipment) $500,000 a. Construct Chelsea Clinic's operating budget for 2015. n key budget assumption might result in a budget variance, and name the variance that would be used to examine results associated with each assumption. b. Discuss how 8.7 Refer to Problem 8.6. Chelsea Clinic's actual results for 2015 are Shown in the table below