Total FFS Visit Volume 100,000 visits

Payer Mix:

Blue Cross 40%

Highmark 60%

Reimbursement Rates:

Blue Cross $28 per visit

Highmark $18 per visit Variable Costs

Resource Inputs:

Labor 50,000 total hours

Supplies 150,000 total units

Resource Input Prices:

Labor $28.00 per hour

Supplies $1.50 per unit

Fixed Costs (overhead, plant, and equipment) $500,000

a. Construct Chelsea Clinic's flexible budget and actual operating results for 2015.

b. What are the profit variance, revenue variance, and cost variance?

c. Focus on the revenue side. What is the volume variance? The price variance?

d. Now consider the cost side. What are the volume and management variances? Break down the management variance into labor, supplies, and fixed costs variances.

e. Interpret your results.