Healthcare Finance, Gapenski, (5th edition) chapter 8, Problem 8.4a: Construct the Flexible Budget.

Static Budget=

Exhibit 8.3
I. Volume Assumptions	Static
A. FFS visits	36,000
B. Capitated members	30,000
# member-months	360,000
expected util rate per member month	0.15
# of visits	54000
T'L expected visits	90,000
II. Revenue Assumptions
A. FFS per visit	$25
expected visits	36,000
	$900,000
B. Capitated PMPM	$3
actual member-months	360,000
	$1,080,000
C. T'L Expected Revenues	$1,980,000
III Cost Assumptions
A. Variable Costs:
Labor	$1,200,000
Supplies	$150,000
T'L VC	$1,350,000
Variable Cost per Visit	$15
B. Fixed Costs:
Overhead, plant & equip	$500,000
C. T'l Expected Costs	$1,850,000
IV. Pro Forma P&L Statement
Revenues:
FFS	$900,000
Capitated	$1,080,000
TOTAL	$1,980,000
Costs:
Variable
FFS	$540,000
Capitated	$810,000
TOTAL	$1,350,000
Contribution Margin	$630,000
Fixed Costs	$500,000
PROJECTED PROFIT	$130,000

Actual Budget=

I. Volume Assumptions	Actual
A. FFS visits	34,000
B. Capitated members	30,000
# member-months	360000
expected util rate per member month	0.12
# of visits	43200
T'L expected visits	77,200
II. Revenue Assumptions
A. FFS per visit	$28
expected visits	34,000
	$952,000
B. Capitated PMPM	$2.75
actual member-months	360000
	$990,000
C. T'L Expected Revenues	$1,942,000
III Cost Assumptions
A. Variable Costs:
Labor	$1,120,000
Supplies	$126,000
T'L VC	$1,246,000
Variable Cost per Visit	$16.14
B. Fixed Costs:
Overhead, plant & equip	$525,000
C. T'l Expected Costs	$1,771,000
IV. Pro Forma P&L Statement
Revenues:
FFS	$952,000
Capitated	$990,000
TOTAL	$1,942,000
Costs:
Variable
FFS	$602,487
Capitated	$765,513
TOTAL	$1,368,000
Contribution Margin	$574,000
Fixed Costs	$525,000
PROJECTED PROFIT	$49,000