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One of the owners of the Fleming Medical Group recently attended a conference on medical practice management, learned of flexible budgeting, and believes it can


One of the owners of the Fleming Medical Group recently attended a conference on medical practice management, learned of flexible budgeting, and believes it can help the practice better manage its revenues and expenses. Using the table in Problem 14-3, BUILD a flexible budget based on 2022 year to date actual expenses and visits, a 4% inflation factor for each line item, and 52,560 forecast patient visits in 2023. What are the total budget, projected net income, and profit margin? Did net income and profit margin increase from the incremental budget prepared in Problem 14-3?


2021 2022 YTD Actual 2022 YTD Budget Budget 2023
Revenue $4,885,987 $2,964,750 $2,950,000





Operating Expenses



Physician salaries $960,000 $585,306 $576,800
Nursing staff salaries 1,380,000 857,157 829,150
Mgt and clerical salaries 780,000 466,971 468,650
HE IS 238,680 143,397 143,407
Health Insurance 390,000 238,760 234,325
Retirement 124,800 76,763 74,984
Unemployment 31,200 18,323 18,746
Medications 148,152 91,687 89,015
Medical instruments 102,792 64,287 61,761
Bandages, gauze 57,468 34,140 34,529
Gloves, gowns 40,416 24,476 24,283
Sterile wipes 26,820 15,780 16,114
Office supplies 115,200 69,388 69,216
Cleaning supplies 39,048 23,103 23,461
Rent 144,000 89,251 86,520
Maintenance 13,764 11,245 8,270
Electricity 10,788 6,684 6,482
Gas 18,504 11,215 11,118
Water and sewage 6,756 4,225 4,059
Telephone 3,228 2,004 1,939
Housekeeping 36,000 21,694 21,630
Travel/meetings/meals 7,908 4,744 4,751
Prof. insurance 22,380 15,669 13,447
CME 29,856 17,994 17,938
Other expenses 57,732 35,955 34,687

$4,785,492 $2,920,218 $2,875,282
Total visits 51,986 30,331 30,672 52,560

Problem 14.3

14.3

The Fleming Medical Group has had a modest net income recently, and the first six months of 2022indicate that their profit margin may be less than 2% if current performance continues. The owners want to put greater emphasis on budgeting to improve financial performance. Using the following table create an incremental budget for the practice based on 2022 year-to-date actual expenses and a 4% inflation factor for each line item. What are the total budget, projected ne income, and profit margin?

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