1. Develop a revenue and expenses budget for both\"Alpha\" and \"Beta\" PCS cent
ID: 2493129 • Letter: 1
Question
1. Develop a revenue and expenses budget for both"Alpha" and "Beta" PCS centers.
2. For each line item in the budget, mention whether the items are variable or fixed, and and the basis of allocation or assignment for the budget for each center. (Note that professional reading fees and laboratory expenses are variable costs that need to be allocated based on the type of visit. Generally, an occupational health visit (category 8 and 9 on Table 3.3 and 3.4) including all physicals has reading and laboratory costs 1.4 times what a general medical visit incurs (Category 1, 2, or 3).)
3. Each center is expected to generate approximately the same profit margin. Given your analysis, will it? Should management change its expectations regarding average revenue per visit by center? To assist with this calculate the profit margin for each clinic.
Submit a budget using Excel and answer the questions outlined above related to revenue.
Proposed Operational Budget for 2015 ($)
Budget Parameters
Patient Revenue: 2,424,000 Deductions 198,768 Net Revenue 2,225,232 Expenses: Salaries and Wages 1,181,200 Staff benefits 425,230 Administrative expenses 21,500 Advertising 3,000 Collection fees 1,800 Consultants 3,750 Computer support 34,000 Equipment leases 4,100 Insurance 28,100 Laboratory 49,000 Laundry/ and housekeeping 13,500 Legal/ Audit 8,450 Medical Supplies 64,750 Printing and postage 11,000 Profesional Fees 28,000 Rent 78,500 Repairs 3,500 Telephone 11,000 Utilities 19,200 Depreciation 73,000 Bad Debt Expenses 10,400 Total Expenses: 2,072,980Explanation / Answer
Though it is expected to generate same profit margin, but as per my analysis, profit margin both the centre are not equal. Alpha is having little lesser margin than Beta. So management should think about average revenue per visit of Alpha centre.
Revenue Budget Ratio Alpha Beta Total Visits, budgeted 7500 5100 12600 Average revenue per visit 160 240 A Gross Revenue 1200000 1224000 2424000 Less Deduction Gross revenue Ratio 98400 100368 198768 B Net Revenue 1101600 1123632 2225232 Expenses Budget Alpha Beta Total Nature of Expenses Salaries and Wages Gross revenue Ratio 584752 596,448 1,181,200 Variable Staff benefits Gross revenue Ratio 210510 214,720 425,230 Fixed Administrative expenses Gross revenue Ratio 10644 10,856 21,500 Fixed Advertising Gross revenue Ratio 1485 1,515 3,000 Fixed Collection fees Visits, budgeted Ratio 1071 729 1,800 Fixed Consultants Gross revenue Ratio 1856 1,894 3,750 Variable Computer support Gross revenue Ratio 16832 17,168 34,000 Fixed Equipment leases Gross revenue Ratio 2030 2,070 4,100 Fixed Insurance Gross revenue Ratio 13911 14,189 28,100 Fixed Laboratory Gross revenue Ratio 24257 24,743 49,000 Variable Laundry/ and housekeeping Visits, budgeted Ratio 8036 6,817 13,500 Fixed Legal/ Audit Gross revenue Ratio 4183 4,267 8,450 Fixed Medical Supplies Gross revenue Ratio 32054 32,696 64,750 Variable Printing and postage Visits, budgeted Ratio 6548 5,554 11,000 Fixed Profesional Fees Gross revenue Ratio 13861 14,139 28,000 Variable Rent Gross revenue Ratio 38861 39,639 78,500 Fixed Repairs Gross revenue Ratio 1733 1,767 3,500 Fixed Telephone Visits, budgeted Ratio 6548 5,554 11,000 Fixed Utilities Visits, budgeted Ratio 11429 9,695 19,200 Variable Depreciation Gross revenue Ratio 36139 36,861 73,000 Fixed Bad Debt Expenses Gross revenue Ratio 5149 5,251 10,400 Fixed C Total Expenses: 1031888 1,046,572 2,072,980 Profit (B-C) 69,712 77,060 152,252 Profit Margin % 6.33 6.86 6.84Related Questions
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