Central City Clinic is an outpatient clinic that provides visiting nurses for elderly patients in their homes.

Question:

Central City Clinic is an outpatient clinic that 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 City. The city 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) $250,396 in 2011 and $279,476 in 2012, as follows:

The nursing staff received a 5% increase in salary one-third of the way through 2010. The homemakers did not receive an increase in wages in 2011 or in 2012. The prices of medical supplies increased about 2% during 2012 compared to 2011. The prices of cleaning supplies were relatively constant across the two years.
Transportation is provided by the nurses, who are reimbursed $0.40 per kilometre. The clinic's general overhead is allocated to programs on the basis of budgeted program salaries.
REQUIRED
A. In this problem, you are not given a budget for 2012. If you want to evaluate performance of the 2012 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 2012, 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 2012 results? Explain.
D. How many patients would have been served in 2012 for $279,476 if costs had been under control?