This is the reconciliation for the Bandon Medical Associates C case from Harvard. Dr. King cannot pay the physicians their bonuses, even though revenue targets were met. Paying the $125,000 in bonuses will result in. $145,000 deficit. The physicians are contracted to work 1500 hours per year but on average 1100 hours were worked. Dr. King is asking how the organization can move forward. She suggests monitoring and restricting the use of extenders or the company could compute the contribution of each case in terms of revenue and variable costs. What is the best way to remain financially viable?

19 Fixed Costs 20 Physician care $ 1.35 243,000 243,000 162,000 81,000 $ 729,000 21 Other fixed expenses 550,000 22 Total fixed expenses $ 1,279,000 23 24 Budgeted operating profit $ 99,500 25 26 Volume variance 94,550 27 Flexible budget RATE Variance (74,500) 28 Flexible Budget USAGE Variance (271,700) 29 Fixed cost variance (560) 30 Pricing Variance 7,000 31 Actual operating profit $ (145,710) 32 Cost of under-utilized physician time Hour 33 Budgeted physician time 180,000 180,000 120,000 60,000 540,000 34 Actual physician time 112,590 165,000 84,000 35,000 396,500 6 35 Under-utilized minutes 67,500 15,000 36,000 25,000 143,500 36 Budgeted cost per minute $ 1.35 37 Cost of under-utilized physician time W $ 193,725 38 Volume Variance Fixed Cost Variance Reconciliation Fully-utilized physician time Ready Num Lock Average: 135,000 Count: 4 Sum: 540,000 eady Num Lock NX P