Budgeting question

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. Requirements: As needed