Central Coast Public Clinic is a free outpatient clinic for public assistance patients. Among other services, the clinic provides visiting nurses for elderly patients in their homes. A homemaker who cleans and performs other household tasks accompanies each nurse. When the nurses are not visiting clients, they work at the office preparing for visits. When the homemakers complete their visits, they go home.

Each year, the clinic receives a budget allotment from the state government. The government does not allow the clinic to spend more than this allotment. The clinic, in turn, allocates its budget among its various programs. The visiting nurse program was authorised (and spent) $250 396 in 2018 and $279 476 in 2019 as follows.

The nursing staff received a 5 per cent increase in salary one-third of the way through 2019. The homemakers did not receive an increase in wages in 2018 or in 2019 The prices of medical supplies increased about 2 per cent during 2019 compared to 2018. The prices of cleaning supplies were relatively constant across the two years.

Transportation is provided by the nurses, who are reimbursed $0.20 per kilometre. The clinics general overhead is allocated to programs on the basis of budgeted program salaries.

Required

(a) In this problem you are not given a budget for 2019. If you want to evaluate performance of the 2019 clinic, what can you use as the basis of a flexible budget to

develop a benchmark?

(b) Prepare a schedule to evaluate the performance of this program in 2019 using the benchmark suggested in part (a).

(c) If you were the general manager of the clinic, what would you like to discuss with the head of the visiting nurse program concerning the 2019 results? Explain.

(d) How many patients should have been served in 2019 for $279 476 if costs had been under control?

2018 $135 378 2019 $145 019 60 046 71 500 21 402 18 197 6 894 Nurses Homemakers Medical supplies Cleaning supplies Transportation Clinic general overhead Total expenditures Home visits Average cost per home visit 9216 11 144 9068 20 813 $250 396 21 195 $279 476 4 312 5 101 $ 58.07 $ 54.79