Please help Review the information presented below in the Sample Operating Budge
ID: 2792690 • Letter: P
Question
Please help
Review the information presented below in the Sample Operating Budget—Department of Physical Therapy and adjust this budget according to the following:
You have just learned that inpatient charges will probably be 3 percent higher than projected and that outpatient charges are expected to increase by 8 percent, and that your research grant support will be reduced by half.
The continuing education conference projected to net $3,200 has been canceled.
Salary expenses will likely be 2 percent higher than originally anticipated.
You are required to show a projected net profit of at least 50 percent of total revenue. If your revised budget generates less than this level of net profit or surplus, indicate where you can probably cut expenses to meet the target and explain why the expenses you have chosen to cut are your best choices.
Note that I am attaching a spreadsheet form that includes the budget, as you might find it easier to do your work.
To respond for this assignment, please:
(2) In a text box, state what the level of net profit or surplus is after you've made the adjustments and indicate what, if any, expense adjustments you would make to maintain net profit at 50% of total revenue.
Sample Operating Budget—Department of Physical Therapy
(July 1, 2013, through June 30, 2014)
I. Revenue and Income
A. Inpatient Charges $550,000
B. Outpatient Charges 310,000
C. Research Grant Support 29,000
D. Continuing Education Conference 3,200
E. Supplies and Equipment Sales 11,500
Total Revenue $903,700
II. Expenses
Direct Expenses
A. Salaries $260,000
B. Consultant 2,500
C. Honorarium 1,500
D. Minor Equipment 6,000
E. Equipment Rental 2,000
F. Travel 2,500
G. Telephone 5,000
H. Supplies 6,000
I. Postage 350
J. Copy Machine Rental 11,000
K. Advertisement 1,500
L. Dues 800
M. Books 350
N. Equipment Maintenance and 2,000 Service Contracts
Total Direct Expenses $301,500
Indirect Expenses
A. Employee Benefits (23%) $59,800
B. Administration 23,000
C. Equipment Depreciation 7,200
D. Physical Plant Operation 39,000
E. Maintenance and Repairs 2,000
F. Building Depreciation 6,000
G. Laundry/Linen 2,500
H. Housekeeping 4,900
Total Indirect Expenses $144,400
Total Expenses $445,900
Net Profit or Loss $457,800
The spread Sheet is here
Budget Worksheet Revenue and Income Inpatient Charges $ 550,000 Outpatient Charges $ 310,000 Research Grant Support $ 29,000 Continuing Education Conference $ 3,200 Supplies and Equipment Sales $ 11,500 Total Revenue $ 903,700 Expenses: Salaries $ 260,000 Consultant $ 2,500 Honorarium $ 1,500 Minor Equipment $ 6,000 Equipment Rental $ 2,000 Travel $ 2,500 Telephone $ 5,000 Supplies $ 6,000 Postage $ 350 Copy Machine Rental $ 11,000 Advertisement $ 1,500 Dues $ 800 Books $ 350 Equipment Maintenance and Service Contracts $ 2,000 Total Direct Expenses $ 301,500 Employee Benefits 23% $ 59,800 Administration $ 23,000 Equipment Depreciation $ 7,200 Physical Plan Operation $ 39,000 Maintenance and Repairs $ 2,000 Building Depreciation $ 6,000 Laundry/Linen $ 2,500 Housekeeping $ 4,900 Total Indirect Expenses $ 144,400 Total Expenses $ 445,900 Net Profit or Loss $ 457,800Explanation / Answer
Revenue and Income
original
Revised
Inpatient Charges
$ 550,000
566500
Outpatient Charges
$ 310,000
334800
Research Grant Support
$ 29,000
14500
Continuing Education Conference
$ 3,200
0
Supplies and Equipment Sales
$ 11,500
11500
Total Revenue
$ 903,700
927300
Expenses:
Salaries
$ 260,000
265200
Consultant
$ 2,500
2500
Honorarium
$ 1,500
1500
Minor Equipment
$ 6,000
6000
Equipment Rental
$ 2,000
2000
Travel
$ 2,500
2500
Telephone
$ 5,000
5000
Supplies
$ 6,000
6000
Postage
$ 350
350
Copy Machine Rental
$ 11,000
11000
Advertisement
$ 1,500
1500
Dues
$ 800
800
Books
$ 350
350
Equipment Maintenance and Service Contracts
$ 2,000
2000
Total Direct Expenses
$ 301,500
306700
Employee Benefits
23%
$ 59,800
60996
Administration
$ 23,000
23000
Equipment Depreciation
$ 7,200
7200
Physical Plan Operation
$ 39,000
39000
Maintenance and Repairs
$ 2,000
2000
Building Depreciation
$ 6,000
6000
Laundry/Linen
$ 2,500
2500
Housekeeping
$ 4,900
4900
Total Indirect Expenses
$ 144,400
145596
Total Expenses
$ 445,900
452296
Net Profit or Loss
$ 457,800
475,004
Net profit is already more than 50 % of the total revenue. So we dont need to cut down any expenses. Further employee benefits of (23%) is increased in the revised budget because the amount of salary has been increased in the new budget i.e employee benefit is now 23% of $ 2,65,200.
Revenue and Income
original
Revised
Inpatient Charges
$ 550,000
566500
Outpatient Charges
$ 310,000
334800
Research Grant Support
$ 29,000
14500
Continuing Education Conference
$ 3,200
0
Supplies and Equipment Sales
$ 11,500
11500
Total Revenue
$ 903,700
927300
Expenses:
Salaries
$ 260,000
265200
Consultant
$ 2,500
2500
Honorarium
$ 1,500
1500
Minor Equipment
$ 6,000
6000
Equipment Rental
$ 2,000
2000
Travel
$ 2,500
2500
Telephone
$ 5,000
5000
Supplies
$ 6,000
6000
Postage
$ 350
350
Copy Machine Rental
$ 11,000
11000
Advertisement
$ 1,500
1500
Dues
$ 800
800
Books
$ 350
350
Equipment Maintenance and Service Contracts
$ 2,000
2000
Total Direct Expenses
$ 301,500
306700
Employee Benefits
23%
$ 59,800
60996
Administration
$ 23,000
23000
Equipment Depreciation
$ 7,200
7200
Physical Plan Operation
$ 39,000
39000
Maintenance and Repairs
$ 2,000
2000
Building Depreciation
$ 6,000
6000
Laundry/Linen
$ 2,500
2500
Housekeeping
$ 4,900
4900
Total Indirect Expenses
$ 144,400
145596
Total Expenses
$ 445,900
452296
Net Profit or Loss
$ 457,800
475,004