Ohio University Chelsea Clinic Operating Budget Finance Exercises
I’m working on a Management exercise and need support.
Chelsea Clinic projected the following budget information for 2015:
Total FFS Visit Volume 90,000 visits
Payer Mix:
Blue Cross 40%
Highmark 60%
Reimbursement Rates:
Blue Cross $25 per visit
Highmark $20 per visit
Variable Costs
Resource Inputs: Labor 48,000 total hours
Supplies 100,000 total units
Resource Input Prices:
Labor $25.00 per hour
Supplies $1.50 per unit
Fixed Costs (overhead, plant, and equipment) $500,000
a. Construct Chelsea Clinic’s operating budget for 2015. b. Discuss how each key budget assumption might result in a budget variance, and name the variance that would be used to examine results associated with each assumption.
Solution of this problem is shown in the video and the using this information you have to solve the problem for this exercise.
Refer to Chelsea Clinic’s actual results for 2015 are shown in the table below.
Total FFS Visit Volume 100,000 visits
Payer Mix:
Blue Cross 40%
Highmark 60%
Reimbursement Rates:
Blue Cross $28 per visit
Highmark $18 per visit Variable Costs
Resource Inputs:
Labor 50,000 total hours
Supplies 150,000 total units
Resource Input Prices:
Labor $28.00 per hour
Supplies $1.50 per unit
Fixed Costs (overhead, plant, and equipment) $500,000
a. Construct Chelsea Clinic’s flexible budget and actual operating results for 2015.
b. What are the profit variance, revenue variance, and cost variance?
c. Focus on the revenue side. What is the volume variance? The price variance?
d. Now consider the cost side. What are the volume and management variances? Break down the management variance into labor, supplies, and fixed costs variances.
e. Interpret your results.
