Please answer question in detail addressing all parts. Reference Table 6.2 is al
ID: 2652837 • Letter: P
Question
Please answer question in detail addressing all parts. Reference Table 6.2 is also shown at the bottom:
------REFERENCE TABLE 6.2-------
6.3 Refer to Carroll Clinic's 2008 operating budget contained in Table 6.2. Instead of the actual results reported in Table 6.3, assume the results reported below: Carroll Clinic: New 2008 Results I. Volume (Number of Visits) Payer A Payer B Total 11,000 12,000 23,000 Reimbursement (Per Reimbursement (Per Visit) $95 $95 Il. Payer A Payer B IlI. Costs Variable Costs: Supplies $350,000Explanation / Answer
Answer: Profit variance= Actual profit - static profit
Revenue variance = Actual revenue - static revenue
Cost variance = Static cost - Actual cost
Based on simple: Profit variance = 335000-130000=205000
Revenue variance =2185000-1980000=205000
Cost variance = 1850000-1850000=0
Based on flexible budget : Profit variance = 335000-300000=35000
Revenue variance =2185000-2180000=5000
Cost variance = 1850000-1880000=30000
Particulars Static budget Flexible budget Actual budget Number of visits Payer A 9000 11000 11000 Payer B 12000 12000 12000 Revenue Payer A 900000 1100000 1045000 Payer B 1080000 1080000 1140000 Total revenue 1980000 2180000 2185000 Variable costs supplies 315000 345000 350000 Fixed cost 1535000 1535000 1500000 Total cost 1850000 1880000 1850000 Profit 130000 300000 335000