SECOND SET OF PROBLEMS:
Here are the budgets of Brandon Surgery Center for the most recent historical quarter (in thousands of dollars):
Static Flexible Actual
Number of surgeries 1,200 1,300 1,300
Patient revenue $2,400 $2,600 $2,535
Salary expense $1,200 $1,000 $1,365
Non salary expense $ 600 $ 650 $ 585
Profit $ 600 $ 650 $ 585
The center assumes that all revenues and costs are variable and hence tied directly to patient volume.
a. Explain how each amount in the flexible budget was calculated.
b. Determine the variance for each line of the profit and loss statement in both dollar terms and percentage terms (Each line has a total variance, a volume variance, and a price variance [for revenues] and management variances [for expenses].
c. What do the part b results tell Brandon’s managers about the surgery centers operations for the quarter?
QUESTION 2 CAROLL CLINIC: NEW 2011 RESULTS
A. FSS 34,000 visits
B. Capitated lives 30,000 members
Number of member months 360,000
Actual utilization per
Member per month
Member per month 0.12
Number of visits 43,200 visits
C. Total actual visits 77,200 visits
A. FFS $28 visit
X 24,000 actual visits
B. Capitated lives $ 2.75 PMPM
X 360,000 actual member visits
C. Total actual revenues $1,942,000
A. Variable costs:
Labor $1,242,000 (46,000 hours at $27/visit)
Supplies $ 126,000 (90,000 units at $1.40/unit)
Total variable costs: $ 17.72 ($1,368,000 x 77,200)
B. Fixed costs:
And equipment $525,000
C. Total actual costs: $1,893,000
Profit and Loss Statement:
Contribution margin $574,000
Fixed Costs $525,000
Actual profits $49,000
a. Construct the flexible budget for 2011.
b. What are profit variance?
What is the cost variance?
Consider the revenue variance. What is the component volume variance?
What is the price variance?
Break down the management variance into labor, supplies, and fixed costs variances.
Provide the following information regarding a dental practice:
Write a 10-12 page paper in which you:
1. Determine what your selected organization would need to take into account when making pricing and service decisions.
2. Describe the overall planning process and the likely components of the selected organization’s financial plan. Be sure to include a discussion as to how you arrived at the answers and use specific examples to illustrate your response.
3. Discuss how time value analysis would help your organization make sound management decisions, use specific examples to illustrate your response.
4. Recommend a major investment for the organization you selected using net present value, pertinent financial ratios, and break-even analysis.
5. Determine the most likely way your selected organization should address financial risk and required returns.
6. Provide at least four (4) qualified resources e.g. peer-reviewed journals, professional organization websites, or health care provider websites. The cover page and reference page are not included in the required length of the paper.
Your assignment must be typed, double spaced using Times New Roman font size 12 with one inch margins on all sides; paper must follow APA formatting Paper must include a traditional header with running header on title page, and page numbers.
Include a cover page that includes:
a. Title of paper: Planning and Budgeting
b. Name of student: Kimberly A. Fahringer
c. Course title: HAS 525 Health Care Finance
d. Professor’s name: Dr. James Coon
e. Date (due May 11, 2012)
The goals of this assignment are:
Describe the overall planning process and the key components of the financial plan
Develop a competence in making financial decisions using net value, pertinent financial ratios, and break-even analysis
Explain why time value analysis is so important to health care financial management
Use technology and information resources to research issues in health financial management
Write clearly and concisely about health financial management using proper writing techniques.
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