8.4,Refer to Carroll Clinic’s 2011 operating budget contained in Exhibit 8.3, Instead of the actual results reported in Exhibit 8.4, assume the results reported below:,Carroll Clinic: New 2011 Results,/. Volume:,A. FFS 34,000 visits,B. Capitated lives 30,000 members,Number of member-months 360,000,Actual utilization per,member-month 0.12,Number of visits 43,200 visits,C. Total actual visits 77,200 visits,,II. Revenues:,,A.FFS $28 per visit,X 34,000 actual visits $ 952,000,,B. Capitated lives $ 2.75 PMPM,X 360,000 actual member-months $ 990,000,,C.Total actual revenues $1,942,000,,III. Costs:,A. Variable Costs:, Labor $1,242,000 (46,000 hours at $27/hour), Supplies 126,000 (90,000 units at $1.40/unit), Total variable costs $ 17.72 ($1,368,000 / 77,200),,B. Fixed Costs, Overhead, plant,, and equipment $525,000,,C. Total actual costs $1,893,000,,IV. Profit & Loss Statement:, Revenues:, FFS $952,000, Capitated $990,000, Total $1,942,000,, Costs:, Variable:, FFS $602,487, Capitated 765,513, Total $1,368,000,, Contribution Margin $574,000, Fixed Costs 525,000, Actual profit $49,000,,a. Construct Carroll’s flexible budget for 2011.,,b. What are the profit variance, revenue variance, and cost variance?,,c. Consider the revenue variance. What is the component volume variance? The price variance?,,d. Break down the cost variance into volume and management components.,,,e. Break down the management variance into labor, supplies, and fixed cost variances.,,f. Interpret your results. In particular, focus on the differences between the variance analysis here and the Carroll Clinic illustration presented in the chapter.
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