Background:

Chelsea Clinic projected the following budget information for 2015:

Total FFS Visit Volume	90,000 visits
Payer Mix:
Blue Cross	40%
Highmark	60%
Reimbursement Rates:
Blue Cross	$25 per visit
Highmark	$20 per visit
Variable Costs
Resource Inputs:
Labor	48,000 total hours
Supplies	100,000 total units
Resource Input Prices:
Labor	$25 per hour
Supplies	$1.50 per unit
Fixed Costs	$ 500,000

Questions:

a. Construct Chelsea Clinic's operating budget for 2015 (prepare a static, flexible, and actual budget comparison).

b. Discuss how each key budget assumption might result in a budget variance, and name the variance that would be used to examine results associated with each assumption.