You are a management accountant 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 As at 31 December 2020 Assets $AUD

Cash 56,500

Accounts Receivable 48,895

ENT Equipment 1,560,000

Less: Accumulated Depreciation ( 190,000)

Total Assets $1,475,395

Liabilities & Shareholder Equity

Accounts Payable 56,400

Bank Loan 600,000

Retained Earnings 818,995

Total Liabilities & Shareholders' Equity $1,475,395

ENT Equipment: 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 8% 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 Dr John Malouf

January 2021 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 95

The average fees received for the two (2) different types of appointments are $260 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 $1 000 /month Paid monthly

Utilities (Water & Electricity) $120 / month Paid quarterly

Insurance $10 000 / year Paid monthly

Telephone, Internet & IT support $200 / month Paid monthly

General Office Expenses $200 /month Paid monthly

Surgical supplies $2600/ month Paid quarterly

Repairs & maintenance of ENT equipment $700 / quarter Paid March, June, September & December

Each ENT Specialist's Individual Salary $300 000 / year excluding on-costs Paid monthly

Each Administrative Assistants Salary $70 000 / year excluding on-costs Paid monthly

Payments: It is estimated that 30% of all operating expenses will be paid in the month they are due and the remaining 70% will be paid in the following month. Salaries: The ENT specialists and administrative staff all receive an annual salary that is paid monthly. It is estimated that their on-costs2 are 30% of their annual salary. They work 37.5 hours per week.

Each employee's allowance for annual leave, public holidays and sick leave amounts to 8 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.

1. Budget Schedules & Expected Outcomes for 2021

Using the information provided, prepare the following operating and financial budgets for the twelve-month period from January 2021 to December 2021. Operating Budgets:

1. Monthly Revenue Budget

2. Labour Budget (including labour cost per appointment type)

3. Monthly Operating Expense Budget

Financial Budgets:

1. Budgeted Income Statement for the year ended 31 December 2021

2. Monthly Cash flow Budget for the year ended 31 December 2021

3. Budgeted Balance Sheet for the year ended 31 December 2021