Dr. Dawn Gifford is a new dentist specializing in treating children under the age of 18. Dr. Gifford has two primary sources of revenues: (1) fees from regular dental work (check-ups, cleanings, fillings, etc.), and (2) fees from specialized dental reconstructive surgery. Last year, Gifford earned an average of $\$ 75$ per patient visit from regular customers and $\$ 800$ per surgery. The following operating expenses were incurred last year in running the office:

Last year Dr. Gifford treated an average of 200 patients per month and performed an average of 8 surgeries per month. She expects to increase the number of patients serviced by 10 percent this coming year and increase the number of surgeries by two per month. She also expects the average patient fee to be $\$ 80$ and the average surgical fee to be $\$ 850$. Gifford expects the variable expenses to remain constant this year, but is expecting to raise the manager's salary by a percent and the hygienist's by 15 percent. She thinks the other expenses will stay about the same.

Based on these data (and ignoring payroll and income taxes):
1. What was the operating profit (loss) for last year?
2. Prepare a revenue budget, operating expense budget, and cash budget for this coming year.

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Variable operating expenses: Dental supplies (per patient)... Hospital surgery room rental (per surgery). Annual fixed operating expenses: Office manager's salary Dental hygienist's salary. Utilities...... Rental of office space... Depreciation expense on office equipment" Liability insurance ... Other expenses... Total equipment cost, $200,000: depreciated over 10 years on a straight-line basis. S 17 10 200 $18,000 26,000 3,600 12,000 20,000 48,000 9,600