Problem 1

Tallahassee Clinic projected the following budget information for 2018:

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

Construct Tallahassee Clinics static operating budget for 2018. (See Exhibit 8.3, page 283. Note that there are four components that need to be included: Volume Assumptions, Revenue Assumptions, Cost Assumptions, and the Pro Forma Profit and Loss or P&L projected Statement.)

Revenue Assumptions

Blue Cross Reimbursement 900,000 (90,000 x 0.4 x 25)

Celtic Insurance Co Reimbursement 1,080,000 (90,000 x 0.6 x 20)

Total Revenue $1,980,000

Cost Assumptions

Variable Expenses

Labor 1,200,000 (48,000 x 25)

Supplies 150,000 (100,000 x 1.5)

Total Variable Expense 1,350,000

Fixed Costs 500,000

Pro Forma Profit and Loss (P&L) Statement:

Revenue:

FFS 1,980,000

Costs:

Variable Costs 1,350,000

Contribution Margin 630,000

Fixed Costs 500,000

Projected Profit 130,000

Problem 2

Refer to Problem 1 above. Tallahassee Clinics actual results for 2018 are shown in the table below:

Total FFS Visit Volume	100,000 visits
Payer Mix:
Blue Cross	40%
Celtic Insurance Company	60%
Reimbursement Rates:
Blue Cross	$28 per visit
Celtic Insurance Company	$18 per visit
Variable Costs Resource Inputs:
Labor	50,000 total hours
Supplies	150,000 total units
Variable Costs Input Prices:
Labor	$28 per hour
Supplies	$1.50 per unit
Fixed Costs (overhead, plant, and equipment)	$500,000

a. Construct Tallahassee Clinics flexible budget for 2018 and actual operating results for 2018. (Hint: place the three budgets side by side. See Exhibits 8.4 and 8.5).

b. What is the profit variance?

c. Wat is the revenue variance?

d. What is the cost variance?

e. Focus on the revenue side. What is the volume variance?

f. Focus on the revenue side. What is the price variance?

g. Focus on the cost side. What is the volume variance?

h. Focus on the cost side. What is the management variance?

I NEED PROBLEM 2 ANSWERED......SENT PROBLEM 1 FOR REFERENCE, IT ALREADY HAS THE ANSWERS. THANK YOU