Question

Chelsea Clinic’s PROJECTED budget information for 2020 is listed below. Please use this information to answer the questions below.

Chelsea Clinic
Total FFS Visit Volume		90,000	visits
Payer Mix:
	Blue Cross	40%
	Highmark	60%
Reimbursment 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)		$ 500,000.00

1a. Based on the projected budget information calculate the total budgeted costs.

Choice: $1,850,000

Choice: $1,455,000

Choice: $2,200,400

Choice: $1,000,000

1b. Based on the projected budget information, calculate the contribution margin.

Choice: $550,000

Choice: $630,000

Choice: $874,000

Choice: $1,000,000

1c.  Based on the projected budget information, calculate the budgeted profit.

Choice: $98,000

Choice: $117,000

Choice: $130,000

Choice: $158,000

Answer 1

Answer 1a:

$ 1,850,000

Answer 1b:

$ 630,000

Answer 1c:

$ 130,000

Calculations:

Particulars	Blue Cross	Highmark	Total
Visits	36,000.00	54,000.00	90,000.00
Rate	$          25.00	$              20.00
Total revenue	$900,000.00	$1,080,000.00	$1,980,000.00
Cost
Labor hours	19,200.00	28,800.00	48,000.00
Labor rate	$          25.00	$              25.00
Total labor cost	$480,000.00	$    720,000.00	$1,200,000.00
Supplies	40,000.00	60,000.00	100,000.00
Rate	$            1.50	$                1.50
Total supplies cost	$   60,000.00	$      90,000.00	$    150,000.00
Contribution	$ 360,000.00	$    270,000.00	$    630,000.00
Less: Fixed cost			$    500,000.00
Profit			$    130,000.00

In case of any doubt, please comment.