Refer to Carroll Clinic’s 2012 operating Budget, contained in exhibit 6.2. Instead of the actualresults reports in exhibit 6.3, assume the results reported below:Carroll Clinic: New 2012Results1.Volume (number of visits)Payer A = 11,000Payer B = 12,000Total =23,0002.Reimbursement (per visit)Payer A = $95Payer B = $953.Costs Variable costs:Supplies = $350,000Fixed Costs:Labor = $ 1,000,000Overhead = $ 500,000Total = $1,500,0004.ForecastedP&L statement Revenues: Payer A = 1,045,000Payer B = 1,140,000Total Revenues =2,185,000Variable costs = 350,000Fixed Costs = 1,500,000Total = 1,850,000Profit =335,000a.What are the profit, revenue, and cost variances based on the simple exhibit 6.2budget?Profit = $335,000 Revenue = $2,185,000 and cost variances = $350,000b.ConstructCarroll’s flexible budget for 2012.c.What are the profit, revenue and cost variances based on theflexible budget?d.Interpret your results. In particular, focus on the differences between thevariance analysis here and the Carroll Clinic illustration presented in the chapter. Image of page3
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