6.2 Budget key: (NE) Number of surgeries (PR) Patient revenue (SE) Salary expense (NE) Nonsalary expense (Profit)

Simple NS 1,200 PR $2,400 SE $1,200 NE $600 Proft $600

Flexible NS 1,300 PR $2,600 SE $ 1,300 NE $ 650 Profit $ 650

Actual NS 1,300 PR $2,535 SE $ 1,365 NE $ 585 Profit $ 585

Carroll Clinic: New 2012 Results

I. Volume(NumberofVisits) Payer A: 8,500

Payer B: 11,000

Total: 19500

II. Reimbursement(PerVisit) PayerA $ 90

PayerB $ 80

III. Costs Variable Costs:

Supplies: $ 320,000

Fixed Costs:

Labor: $ 1,050,000

Overhead: 550,000

Total: $1,600,000

IV. Forecasted P&L Statement

Revenues:

Payer A :$765,000 Payer B: 880,000 Total revenues: $1,645,000

Variable costs: $ 320,000

Fixed: 1,600,000

Total: $1,920,000

Profit: ($ 275,000)

Prepare a professional financial analysis in Excel! Be sure to show your formulas.

a. What are the profit, revenue, and cost variances based on the simple (Exhibit 6.2) budget? b. Construct Carrolls flexible budget for 2012.

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 and in Problem 6.3.