1. Change variable cost for flexible budget to suit new volume of visits (calcul
ID: 2639210 • Letter: 1
Question
1. Change variable cost for flexible budget to suit new volume of visits (calculate a per visit cost with the original volumes, then increase to the new volume)
2. Fill in table
3. Fill in P&L Statement
Simple Budget
Flexible Budget
Actual
Simple Variance
Flexible Variance
I. Volume (Number of Visits)
Payer A
9,000
11,000
11,000
Payer B
12,000
12,000
12,000
II. Reimbursement (Per Visit)
Payer A
$100
$100
$ 95
Payer B
$ 90
$90
$ 95
III. Costs
Variable Costs (Total):
Supplies
$ 315,000
$ 350,000
Fixed Costs (Total):
Labor
$1,035,000
$1,035,000
$1,000,000
Overhead
$ 500,000
$500,000
$ 500,000
Forecasted P&L Statement
Revenues:
Payer A
Payer B
Total Revenues
Variable Costs
$315,000
$350,000
Fixed Costs
$1,535,000
$1,535,000
$1,500,000
Total Costs
$1,850,000
$1,850,000
Profit
Simple Budget
Flexible Budget
Actual
Simple Variance
Flexible Variance
I. Volume (Number of Visits)
Payer A
9,000
11,000
11,000
Payer B
12,000
12,000
12,000
II. Reimbursement (Per Visit)
Payer A
$100
$100
$ 95
Payer B
$ 90
$90
$ 95
III. Costs
Variable Costs (Total):
Supplies
$ 315,000
$ 350,000
Fixed Costs (Total):
Labor
$1,035,000
$1,035,000
$1,000,000
Overhead
$ 500,000
$500,000
$ 500,000
Forecasted P&L Statement
Revenues:
Payer A
Payer B
Total Revenues
Variable Costs
$315,000
$350,000
Fixed Costs
$1,535,000
$1,535,000
$1,500,000
Total Costs
$1,850,000
$1,850,000
Profit
Explanation / Answer
Simple Budget Flexible Budget Actual Simple Variance Flexible Variance I. Volume (Number of Visits) Payer A 9,000 11,000 11,000 2,000 0 Payer B 12,000 12,000 12,000 0 0 II. Reimbursement (Per Visit) Payer A $ 100 $ 100 $ 95 $ (5) $ (5) Payer B $ 90 $ 90 $ 95 $ 5 $ 5 III. Costs Variable Costs (Total): Supplies $ 315,000 $ 345,000 $ 350,000 $ (35,000) $ (5,000) Fixed Costs (Total): Labor $ 1,035,000 $ 1,035,000 $ 1,000,000 $ 35,000 $ 35,000 Overhead $ 500,000 $ 500,000 $ 500,000 $ - $ - Forecasted P&L Statement Revenues: Payer A $ 900,000 $ 1,100,000 $ 1,045,000 $ 145,000 $ (55,000) Payer B $ 1,080,000 $ 1,080,000 $ 1,140,000 $ 60,000 $ 60,000 Total Revenues $ 1,980,000 $ 2,180,000 $ 2,185,000 $ 205,000 $ 5,000 Variable Costs $ 315,000 $ 345,000 $ 350,000 $ (35,000) $ (5,000) Fixed Costs $ 1,535,000 $ 1,535,000 $ 1,500,000 $ 35,000 $ 35,000 Total Costs $ 1,850,000 $ 1,880,000 $ 1,850,000 $ - $ 30,000 Profit $ 130,000 $ 300,000 $ 335,000 $ 205,000 $ 35,000
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