Refer to Carroll Clinics 2012 operating budget, contained in Exhibit 6.2. Instead of the actual results reported in Exhibit 6.3, assume the results reported below: Carroll Clinic: New 2012 Results

I. Volume(NumberofVisits) Payer A 11,000 Payer 12,000 Total 23,000

II. Reimbursement(perVisit) PayerA $ 95 PayerB $ 95

III. Costs Variable Costs: Supplies $ 350,000 Fixed Costs: Labor $1,000,000 Overhead 500,000 Total $1,500,000

IV. Forecasted P&LStatement 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 $1,850,000 Profit $ 335,000

In an excel spreadsheet that shows formulas, answer these questions?

a. What are the profit, revenue, and cost variances based on the simple (Exhibit 6.2) budget? b. Construct Carrolls flexible budget for 2012. c. What are the profit, revenue, and cost variances based on the flexible budget? d. Interpret your results. In particular, focus on the differences between the variance analysis here and the Carroll Clinic illustration presented in the chapter.