Review the information presented below in the Sample Operating Budget and adjust this budget according to the following:

You have just learned that inpatient charges will probably be 3% higher than projected and that outpatient charges are expected to increase by 8%, and that your research grant support will be reduced by half.

The continuing education conference projected to net $3,200 has been canceled.

Salary expenses will likely be 2% higher than originally anticipated.

You are required to show a projected net profit of at least 50% of total revenue. If your revised budget generates less than this level of net profit or surplus, indicate where you can probably cut expenses to meet the target and explain why the expenses you have chosen to cut are your best choices.

Sample Operating BudgetDepartment of Physical Therapy

(July 1, 20n1, through June 30, 20n2)

I. Revenue and Income

A. Inpatient Charges $550,000

B. Outpatient Charges 310,000

C. Research Grant Support 29,000

D. Continuing Education Conference 3,200

E. Supplies and Equipment Sales 11,500

Total Revenue $903,700

II. Expenses

Direct Expenses

A. Salaries $260,000

B. Consultant 2,500

C. Honorarium 1,500

D. Minor Equipment 6,000

E. Equipment Rental 2,000

F. Travel 2,500

G. Telephone 5,000

H. Supplies 6,000

I. Postage 350

J. Copy Machine Rental 11,000

K. Advertisement 1,500

L. Dues 800

M. Books 350

N. Equipment Maintenance and Service Contracts 2,000

Total Direct Expenses $301,500

III. Indirect Expenses

A. Employee Benefits (23%) $59,800

B. Administration 23,000

C. Equipment Depreciation 7,200

D. Physical Plant Operation 39,000

E. Maintenance and Repairs 2,000

F. Building Depreciation 6,000

G. Laundry/Linen 2,500

H. Housekeeping 4,900

Total Indirect Expenses $144,400

Total Expenses $445,900

Net Profit or Loss $457,800