Refer to Problem 8.6. Chelsea Clinic’s actual results for 2015 are shown in the table below.

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 variance?

d. Now consider the cost side. What are the volume and management variances? Break down the management variance into labor, supplies, and fixed costs variances.

e. Interpret your results.

Problem 8.6.

Chelsea Clinic projected the following budget information for 2015:

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Total FFS Visit Volume Payer Mix: 100,000 visits Blue Cross 40% Highmark Reimbursement Rates: Blue Cross 60% $28 per visit Highmark $18 per visit Variable Costs Resource Inputs: Labor 50,000 total hours Supplies 150,000 total units Resource Input Prices: Labor $28.00 per hour Supplies Fixed Costs (overhead, plant, and equipment) $1.50 per unit $500,000