6.4 Again, refer to Carroll Clinic's 2012 operating budget, contained in Exhibit 6.2. Instead of the actual results reported in Exhibit 6.3 or listed in Problem 6.3, assume the results:

Carroll Clinic: New 2012 Results 1. Volume (Number of Visits) Payer A 8,500 Payer B 11,000 Total 19,500 2. Reimbursement (Per Visit) Payer A $90 Payer B $80

3. Costs Variable Costs: Supplies $320,000 Fixed Costs: Labor $1,050,000 Overhead $550,000 Total $1,600,000 4. Forecasted P&L Statement Revenues: Payer A $765,000 Payer B $880,000 Total Rev.$1,645,000 Variable costs$320,000 Fixed costs $1,600,000 Total $1,920,000 Profit ($275,000) a. What are the profit, revenue and cost variances based on the simple (Exhibit 6.2) budget? b. Construct Carroll's 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 I really would appreciate assistance on this question. ----------------------- Reference to Exhibit 6.2 (page 173) Fundamentals of Healthcare Finance 1. Volume (Number of Visits) Payer A 9,000 Payer B 12,000 Total 21,000 2. Reimbursement (Per Visit) Payer A $100 Payer B $90 3. Costs Variable Costs: Supplies $315,000 Fixed Costs:

Labor $1,035,000 Overhead $500,000 Total $1,535,000 4. Forecasted P&L Statement Revenues: Payer A $900,000 Payer B $1,080,000 Total rev.$1,980,000 Variable costs $315,000 Fixed costs $1,535,000 Total costs $1,850,000 Profit $130,000