Refer to Carroll Clinic’s 2008 operating budget contained in Table 6.2. Instead of the actual results reported in Table 6.3, assume the results reported below:

Carroll Clinic: New 2008 Results

a. What are the profit, revenue, and cost variances based on the simple (Table 6.2)
budget?

b. Construct Carroll’s flexible budget for 2008.
c.What are the profit, revenue, and cost variances based on the flexible budget?

d. Interpret your results. In particular, focus on the differences between the variance analysis here and the Carroll Clinic illustration presented in the chapter.

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1. Volume (Number of Visits) Payer A Payer B Total 11,000 12,000 23,000 II. Reimbursement (Per Visit) III. Costs Payer A $95 Payer B $95 Variable Costs: Supplies $350,000