Question 1: A local clinic created the following static budget table for the year 2015.

• Complete the table below by filling the blanks and creating a profit and loss statement under section IV

Section I: Volume Assumptions

FFS 50,000 visitsCapitated lives 30,000 membersTotal Expected visits -------------------------

Section II: Revenue Assumptions

A. FFS $30 per visit (30 X 50,000 expected visits)

=$ 1,500,000

B. Capitated lives $3 PMPM (3 X 360,000 member months)

= $ 1,080,000

• Total Expected Revenues -------------------------

Section III: Cost Assumptions

Variable Costs:Fixed Costs $ 500,000Total expected costs --------------------------In addition to the static budget, the clinic also created a flexible and actual budget to reflect the realized volume and actual volume, respectively (see table below). Fill in the blanks on the table below and answer the following questions using the numbers in the table:Calculate and interpret the profit varianceCalculate and interpret the revenue varianceCalculate and interpret the cost varianceCalculate and interpret the volume and price variances on the revenue side

Calculate and interpret the volume and price variances on the cost side

	Static budget	Actual budget	Flexible budget
Assumptions: FFS visits Capitated visits Total	50,000 90,000 140,000	60,000 100,000 160,000	60,000 100,000 160,000
Revenues: FFS Capitated Total	$1,500,000 $1,080,000 $2,580,000	$1,680,000 $1,080,000 $2,760,000	$1,400,000 $1,080,000 $2,480,000
Costs: Variable FFS Capitated Total	$643,000 $1,157,400 $1,800,400	$833,400 $1,389,000 $2,222,400	$750,000 $1,080,000 $1,830,000
Contribution Margin	--------------------	---------------------	-------------------
Fixed costs	$500,000	$500,000	$500,000
Profit	---------------------	----------------------	-------------------