Using the organization selected, create a budget for the next fiscal year. Set out the details of all assumptions you needed in order to build this budget. Make an assumption about depreciation rate. You can choose your own depreciation method. Be sure to include it in your assumptions.

Exhibit 162 Checklist for Building a Budget 1. What is the proposed volume for the new budget period? 2. What is the appropriate inflow (revenues) and outflow (cost of services delivered) relationship? 3. What will the appropriate dollar cost be? (Note: this question requires a series of assumptions about the nature of the opera- tion for the new budget period.) 3a. Forecast service-related workload. 3b. Forecast non-service-related workload. 3c. Forecast special project workload if applicable. 3d. Coordinate assumptions for proportionate share of interdepartmental projects. 4. Will additional resources be available? 5. Will this budget accomplish the appropriate managerial objectives for the organization? Metropolis Health System Balance Sheet March 31, 2_ Liabilities and Fund Balance Current Liabilities Assets Current Assets Cash and Cash Equivalents $1,150,000 Assets Whose Use Is Limited 825,000 Patient Accounts Receivable 7,400,000 (Net of $1,300,000 Allowance for Bad Debts) Other Receivables 150,000 Inventories 900,000 Prepaid Expenses 200,000 Total Current Assets 10,625,000 Assets Whose Use Is Limited Corporate Funded Depreciation 1,950,000 Held by Trustee Under Bond Indenture Agreement 1,425,000 Total Assets Whose Use Is Limited 3,375,000 Current Maturities of Long-Term Debt $525,000 Accounts Payable and Accrued Expenses 4,900,000 Bond Interest Payable 300,000 Reimbursement Settlement Payable 100,000 Total Current Liabilities 5,825,000 Long-Term Debt 6,000,000 Less Current Portion of Long-Term Debt (525,000) Net Long-Term Debt 5,475,000 Total Liabilities 11,300,000 Fund Balances General Fund 21,500,000 21,500,000 Total Fund Balances Less Current Portion (825,000) Total Liabilities and Fund Balances $32,800,000 Net Assets Whose Use Is Limited 2,550,000 Property, Plant, and Equipment, Net Other Assets 19,300,000 325,000 $32,800,000 Total Assets Metropolis Health System Statement of Revenue and Expense for the Year Ended March 31, 2_ Revenue Net patient service revenue $34,000,000 Other revenue 1,100,000 Total Operating Revenue $35,100,000 Expenses Nursing services $5,025,000 Other professional services 13,100,000 General services 3,200,000 Support services 8,300,000 Depreciation 1,900,000 Amortization 50,000 Interest 325,000 Provision for doubtful accounts 1,500,000 Total Expenses 33,400,000 Income from Operations $1,700,000 Nonoperating Gains (Losses) Unrestricted gifts and memorials Interest income Nonoperating Gains, Net $20,000 80,000 100,000 Revenue and Gains in Excess of Expenses and Losses $1,800,000 Metropolis Health System Statement of Cash Flows for the Year Ended March 31, 2 Statement of Cash Flows $1,700,000 1,950,000 Operating Activities Income from operations Adjustments to reconcile income from operations to net cash flows from operating activities Depreciation and amortization Changes in asset and liability accounts Patient accounts receivable Other receivables Inventories Prepaid expenses and other assets Accounts payable and accrued expenses Reduction of bond interest payable Estimated third-party payer settlements Interest income received Unrestricted gifts and memorials received Net cash flow from operating activities 250,000 (50,000) (50,000) (50,000) (400,000) (25,000) (75,000) 80,000 20,000 $3,350,000 Cash Flows from Capital and Related Financing Activities Repayment of long-term obligations (500,000) Cash Flows from Investing Activities Purchase of assets whose use is limited Equipment purchases and building improvements (100,000) (2,000,000) Net Increase (Decrease) in Cash and Cash Equivalents $750,000 Cash and Cash Equivalents, Beginning of Year 400,000 Cash and Cash Equivalents, End of Year $1,150,000 Metropolis Health System Statement of Changes in Fund Balance for the Year Ended March 31, 2 General Fund Balance April 1, 2 $19,700,000 Revenue and Gains in Excess of Expenses and Losses 1,800,000 General Fund Balance March 31, 2 $21,500,000 Metropolis Health System Schedule of Property, Plant, and Equipment for the Year Ended March 31, 2_ Buildings and Improvements $14,700,000 Land Improvements 1,100,000 Equipment 28,900,000 Total $44,700,000 Less Accumulated Depreciation (26,100,000) Net Depreciable Assets $18,600,000 Land 480,000 Construction in Progress 220,000 Net Property, Plant, and Equipment $19,300,000 Metropolis Health System Schedule of Patient Revenue for the Year Ended March 31, 2_ Patient Services Revenue Routine revenue Laboratory Radiology and CT scanner OB-nursery Pharmacy Emergency service Medical and surgical supply and IV Operating rooms Anesthesiology Respiratory therapy Physical therapy EKG and EEG Ambulance service Oxygen Home health and hospice Substance abuse Other $9,850,000 7,375,000 5,825,000 450,000 3,175,000 2,200,000 5,050,000 5,250,000 1,600,000 900,000 1,475,000 1,050,000 900,000 575,000 1,675,000 375,000 775,000 Subtotal $48,500,000 Less allowances and charity care (14,500,000) Net Patient Service Revenue $34,000,000 Metropolis Health System Schedule of Operating Expenses for the Year Ended March 31, 2 Nursing Services Routine Medical/Surgical Operating Room Intensive Care Units OB-Nursery Other Total $3,880,000 300,000 395,000 150,000 300,000 $5,025,000 General Services Dietary Maintenance Laundry Housekeeping Security Medical Records Total $1,055,000 1,000,000 295,000 470,000 50,000 330,000 $3,200,000 Support Services General Insurance Payroll Taxes Employee Welfare Other Total $4,600,000 240,000 1,130,000 1,900,000 430,000 $8,300,000 Other Professional Services Laboratory $2,375,000 Radiology and CT Scanner 1,700,000 Pharmacy 1,375,000 Emergency Service 950,000 Medical and Surgical Supply 1,800,000 Operating Rooms and Anesthesia 1,525,000 Respiratory Therapy 525,000 Physical Therapy 700,000 EKG and EEG 185,000 Ambulance Service 80,000 Substance Abuse 460,000 Home Health and Hospice 1,295,000 Other 130,000 Total $13,100,000 Depreciation Amortization 1,900,000 50,000 Interest Expense 325,000 Provision for Doubtful Accounts 1,500,000 Total Operating Expenses $33,400,000 Metropolis Health System Schedule of Hospital Statistics for the Year Ended March 31, 2 Departmental Volume Indicators: Inpatient Indicators: Patient Days Medical and surgical Obstetrics Skilled nursing unit 13,650 1,080 4,500 51,480 34,050 Admissions Adult acute care Newborn Skilled nursing unit Respiratory therapy treatments Physical therapy treatments Laboratory workload units (in thousands) EKGs CT scans MRI scans Emergency room visits Ambulance trips Home health visits 3,610 315 440 2,750 8,900 2,780 910 11,820 2,320 14,950 Discharges Adult acute care Newborn Skilled nursing unit 3,580 315 445 Approximate number of employees (FTE) 510 Average Length of Stay (in days) 4.1 Exhibit 162 Checklist for Building a Budget 1. What is the proposed volume for the new budget period? 2. What is the appropriate inflow (revenues) and outflow (cost of services delivered) relationship? 3. What will the appropriate dollar cost be? (Note: this question requires a series of assumptions about the nature of the opera- tion for the new budget period.) 3a. Forecast service-related workload. 3b. Forecast non-service-related workload. 3c. Forecast special project workload if applicable. 3d. Coordinate assumptions for proportionate share of interdepartmental projects. 4. Will additional resources be available? 5. Will this budget accomplish the appropriate managerial objectives for the organization? Metropolis Health System Balance Sheet March 31, 2_ Liabilities and Fund Balance Current Liabilities Assets Current Assets Cash and Cash Equivalents $1,150,000 Assets Whose Use Is Limited 825,000 Patient Accounts Receivable 7,400,000 (Net of $1,300,000 Allowance for Bad Debts) Other Receivables 150,000 Inventories 900,000 Prepaid Expenses 200,000 Total Current Assets 10,625,000 Assets Whose Use Is Limited Corporate Funded Depreciation 1,950,000 Held by Trustee Under Bond Indenture Agreement 1,425,000 Total Assets Whose Use Is Limited 3,375,000 Current Maturities of Long-Term Debt $525,000 Accounts Payable and Accrued Expenses 4,900,000 Bond Interest Payable 300,000 Reimbursement Settlement Payable 100,000 Total Current Liabilities 5,825,000 Long-Term Debt 6,000,000 Less Current Portion of Long-Term Debt (525,000) Net Long-Term Debt 5,475,000 Total Liabilities 11,300,000 Fund Balances General Fund 21,500,000 21,500,000 Total Fund Balances Less Current Portion (825,000) Total Liabilities and Fund Balances $32,800,000 Net Assets Whose Use Is Limited 2,550,000 Property, Plant, and Equipment, Net Other Assets 19,300,000 325,000 $32,800,000 Total Assets Metropolis Health System Statement of Revenue and Expense for the Year Ended March 31, 2_ Revenue Net patient service revenue $34,000,000 Other revenue 1,100,000 Total Operating Revenue $35,100,000 Expenses Nursing services $5,025,000 Other professional services 13,100,000 General services 3,200,000 Support services 8,300,000 Depreciation 1,900,000 Amortization 50,000 Interest 325,000 Provision for doubtful accounts 1,500,000 Total Expenses 33,400,000 Income from Operations $1,700,000 Nonoperating Gains (Losses) Unrestricted gifts and memorials Interest income Nonoperating Gains, Net $20,000 80,000 100,000 Revenue and Gains in Excess of Expenses and Losses $1,800,000 Metropolis Health System Statement of Cash Flows for the Year Ended March 31, 2 Statement of Cash Flows $1,700,000 1,950,000 Operating Activities Income from operations Adjustments to reconcile income from operations to net cash flows from operating activities Depreciation and amortization Changes in asset and liability accounts Patient accounts receivable Other receivables Inventories Prepaid expenses and other assets Accounts payable and accrued expenses Reduction of bond interest payable Estimated third-party payer settlements Interest income received Unrestricted gifts and memorials received Net cash flow from operating activities 250,000 (50,000) (50,000) (50,000) (400,000) (25,000) (75,000) 80,000 20,000 $3,350,000 Cash Flows from Capital and Related Financing Activities Repayment of long-term obligations (500,000) Cash Flows from Investing Activities Purchase of assets whose use is limited Equipment purchases and building improvements (100,000) (2,000,000) Net Increase (Decrease) in Cash and Cash Equivalents $750,000 Cash and Cash Equivalents, Beginning of Year 400,000 Cash and Cash Equivalents, End of Year $1,150,000 Metropolis Health System Statement of Changes in Fund Balance for the Year Ended March 31, 2 General Fund Balance April 1, 2 $19,700,000 Revenue and Gains in Excess of Expenses and Losses 1,800,000 General Fund Balance March 31, 2 $21,500,000 Metropolis Health System Schedule of Property, Plant, and Equipment for the Year Ended March 31, 2_ Buildings and Improvements $14,700,000 Land Improvements 1,100,000 Equipment 28,900,000 Total $44,700,000 Less Accumulated Depreciation (26,100,000) Net Depreciable Assets $18,600,000 Land 480,000 Construction in Progress 220,000 Net Property, Plant, and Equipment $19,300,000 Metropolis Health System Schedule of Patient Revenue for the Year Ended March 31, 2_ Patient Services Revenue Routine revenue Laboratory Radiology and CT scanner OB-nursery Pharmacy Emergency service Medical and surgical supply and IV Operating rooms Anesthesiology Respiratory therapy Physical therapy EKG and EEG Ambulance service Oxygen Home health and hospice Substance abuse Other $9,850,000 7,375,000 5,825,000 450,000 3,175,000 2,200,000 5,050,000 5,250,000 1,600,000 900,000 1,475,000 1,050,000 900,000 575,000 1,675,000 375,000 775,000 Subtotal $48,500,000 Less allowances and charity care (14,500,000) Net Patient Service Revenue $34,000,000 Metropolis Health System Schedule of Operating Expenses for the Year Ended March 31, 2 Nursing Services Routine Medical/Surgical Operating Room Intensive Care Units OB-Nursery Other Total $3,880,000 300,000 395,000 150,000 300,000 $5,025,000 General Services Dietary Maintenance Laundry Housekeeping Security Medical Records Total $1,055,000 1,000,000 295,000 470,000 50,000 330,000 $3,200,000 Support Services General Insurance Payroll Taxes Employee Welfare Other Total $4,600,000 240,000 1,130,000 1,900,000 430,000 $8,300,000 Other Professional Services Laboratory $2,375,000 Radiology and CT Scanner 1,700,000 Pharmacy 1,375,000 Emergency Service 950,000 Medical and Surgical Supply 1,800,000 Operating Rooms and Anesthesia 1,525,000 Respiratory Therapy 525,000 Physical Therapy 700,000 EKG and EEG 185,000 Ambulance Service 80,000 Substance Abuse 460,000 Home Health and Hospice 1,295,000 Other 130,000 Total $13,100,000 Depreciation Amortization 1,900,000 50,000 Interest Expense 325,000 Provision for Doubtful Accounts 1,500,000 Total Operating Expenses $33,400,000 Metropolis Health System Schedule of Hospital Statistics for the Year Ended March 31, 2 Departmental Volume Indicators: Inpatient Indicators: Patient Days Medical and surgical Obstetrics Skilled nursing unit 13,650 1,080 4,500 51,480 34,050 Admissions Adult acute care Newborn Skilled nursing unit Respiratory therapy treatments Physical therapy treatments Laboratory workload units (in thousands) EKGs CT scans MRI scans Emergency room visits Ambulance trips Home health visits 3,610 315 440 2,750 8,900 2,780 910 11,820 2,320 14,950 Discharges Adult acute care Newborn Skilled nursing unit 3,580 315 445 Approximate number of employees (FTE) 510 Average Length of Stay (in days) 4.1