working in the Finance team at Miles private hospital. You have been assigned to assist the ENT (Ear, Nose and Throat) specialists1 that operate out of rented premises on level 6 at the hospital. You are to prepare their master budget for 2021 and make recommendations on how they could improve their operations. There are three (3) ENT Specialists in the practice; Dr Janet Courtney, Dr Samantha Downer and Dr John Malouf. They are supported by two (2) administrative staff; Daniel Hall and Julie Sky.
The following information has been gathered about the practice: ENT Clinic; Miles Private Hospital Balance Sheet A5 at 31 December 2020 _ Accounts Receivable 48: 395 EMT Equipment (.1153? 000 Less: Accum uio ted Depreciation 51315395 5mm Depreciation on the ENT equipment totals $95,000 per year. Depreciation is recorded monthly. Bank Loan: The business has an interest only loan and the interest is paid monthly. The principle can be repaid at any time. The interest rate payable on the loan is 3% per annum. Expected patient visits for each of the ENT specialists for 2021 are indicated in the table below. 75% of the visits are expected to be half-hour appointments and the remainder will be one hour surgeries: Dr Janet Courtney Dr Samantha Downer January 2021 Dr John Malouf 90 80 95 February 2021 80 80 95 March 2021 80 80 95 April 2021 80 80 95 May 2021 70 80 95 June 2021 70 80 95 July 2021 50 80 95 August 2021 50 80 95 September 2021 40 80 95 October 2021 40 80 95 November 2021 40 80 95 December 2021 50 80 95 January 2022 40 80 95 February 2022 40 80 95The average fees received for the two (2] different types of appointments are 5260 for half an hour {30 minutes] appointments and $400 for one hour surgeries [60 minutes}. Cash collections: Sixty per cent {60%} of the revenue received for each month's ENT's services and surgeries is collected during the month when the services and surgeries are rendered and the remainder {40%} is collected the following month. The following table outlines the operating costs for the year. Operating Costs Payment Rent Utilities [Water 8' Electricity} Insurance 510000 f year Paid monthly Telephone, Internet 8: IT support General Office Expenses $200 {month Paid monthly Surgicai supplies $2603! month Paid quartey Repairs 3. maintenance of ENT Squuarter Paid March, June, equipment Septemberi December Each ENT Specialist's Individual Salary $300000!year Paid monthly __ Each Administrative Assistants Salary $70 000/ year excludin on-oosts Payments: It is estimated that 3096 of all operating expenses will be paid in the month they are due and the remaining 10% will be paid in the following month. Salaries: The ENT specialists and administrative staff all receive an annual salary that is paid monthty. It is estimated that their on-costs2 are 30% of their annual salary. They work 315 hours per week. Each employee's allowance for annual leave, public holidays and sick leave amounts to 3 weeks per year. They are also given an allowance for non-billable time of 2 hours per week which includes professional development, department meetings and idle time. Ignore GST and Income Tax.
