Problem 1 Tallahassee Clinic's operating budget for 2018 is presented below: Volume (Number of Visits) Payer A 9,000 Payer B 12,000 Total 21,000 Reimbursement Rates (per Visit) Payer A $100 per visit Payer B $90 per visit Costs Variable Costs: Supplies ($15 x 21,000 visits) $315,000 Fixed costs: Labor $1,035,000 Overhead $500,000 Total fixed costs $1,535,000 Forecasted P&L Statement Revenues: Payer A $900,000 Payer B $1,080,000 Total revenues $1,980,000 Variable costs $315,000 Fixed costs $1,535,000 Total costs $1,850,000 Profit $130,000 The actual results for 2018 are presented below: Volume (Number of visits) Payer A 11,000 Payer B 12,000 Total 23,000 Reimbursement Rates (per Visit) Payer A $95 per visit Payer B $95 per visit Costs Variable Costs: Supplies $350,000 Fixed costs: Labor $1,000,000 Overhead $500,000 Total fixed costs $1,500,000 Forecasted P&L Statement Revenues: Payer A $1,045,000 Payer B $1,140,000 Total revenues $2,185,000 Variable costs $350,000 Fixed costs $1,500,000 Total costs $1,850,000 Profit $335,000 a. Based on the simple (original) operating budget, calculate the revenue, cost, and profit variances (see Exhibit 6.3, part IV). Indicate if favorable (F) or unfavorable (U). Hint: complete the following table: Simple Budget Actual results Variance ($) For U Revenues: Payer A Payer B Total revenues Variable costs Fixed costs Total costs b. Construct Tallahassee Clinic's flexible budget for 2018. See exhibit 6.4. Hint: complete the following table: $ $ $ Volume (Number of Visits) Payer A Payer B Total Reimbursement Rates (per Visit) Payer A Payer B Costs Variable Costs: Supplies Fixed costs: Labor Overhead Total fixed costs Forecasted P&L Statement Revenues: Payer A Payer B Total revenues Variable costs Fixed costs Total costs Profit $1 $ $1 $ $ $ $ $ $ C. Based on the flexible budget (part b), calculate revenue, cost, and profit variances. See Exhibit 6.4, part IV). Indicate if favorable (F) or unfavorable (U). Hint: complete the following table. Flexible Budget Actual results Variance ($) For U Revenues: Payer A Payer B Total revenues Variable costs Fixed costs Total costs