Refer to Carroll Clinic’s 2007 operating budget contained in Table 8.3.

Instead of the actual results reported in Table 8.4, assume the results reported below:

a. Construct Carroll’s flexible budget for 2007.

b. What are the profit variance, revenue variance, and cost variance?

c. Consider the revenue variance. What is the component volume variance? The price variance?

d. Break down the cost variance into volume and management components.

e. Break down the management variance into labor, supplies, and fixed costs variances.

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

Transcribed Image Text:

Carroll Clinic: New 2007 Results I. Volume: A. FFS 34,000 visits B. Capitated lives 30,000 members Number of member months 360,000 Actual utilization per member-month Number of visits C. Total actual visits 0.12 43,200 visits 77,200 visits