Again, refer to Carool 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

11. Reimbursement (Per Visit)

Payer A $90

Payer B $80

111. 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 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.

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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

11. Reimbursement (Per Visit)

Payer A $100

Payer B $90

111. Costs

Variable Costs:

Supplies $315,000

Fixed Costs:

Labor $1,035,000

Overhead $500,000

Total $1,535,000

IV. Forecasted P & L Statement

Revenues:

Payer A $900,000

Payer B $1,080,000

Total revenues $1,980,000

Variable costs $315,000

Fixed costs $1,535,000

Total costs $1,850,000

Profit $130,000