Question

As the Manager of the Bronxville location of the Metropolitan Clinic, you have been assigned to complete the 2017 operating expense budget. This clinic provides primary care to patients of all ages. It has contracts in place with all of the major payers as well as all of the Medicaid Managed Care providers currently licensed in NY State.

In preparing your budget for next year you have been given several assumptions, as follows:

• Salaries, benefits and taxes will increase by 4.2% with no adjustment for volume changes.
• Budgeted amounts for rent and physician services are fixed by contract and in 2017 will equal 2016 levels.
• The cost of Drugs is expected to increase by 8.9%
• All other items are expected to increase by 5%.
• No more money is available in 2016 to spend on office equipment, but an additional $5,000 in medical equipment will be spent in the remainder of 2016.  The medical and office equipment budgets for 2017 will equal the 2016 projected actual.

The data you have been provided for the current year, 2016, is actual expense thru August.

In completing this sheet, you must project 2016 final actual expenses and then project the budget amounts for 2017. Do not just insert numbers into the various cells, use formulas to do your calculations.

		8 Month Actual		Projected 2016		Budget 2017
Salaries		$400,000.00
Federal and NY Tax		$64,000.00
Benefits		$56,000.00
Sub-Total Salaries and Benefits		$520,000.00
Rent		$65,000.00
Electric		$6,000.00
Natural Gas		$3,900.00
Patient Supplies		$10,000.00
Drugs		$12,500.00
Sutures and Casts		$5,003.00
Pt. Medical Equip.		$675.00
Pt. Food		$2,596.00
Physician Services		$250,000.00
Miscellaneous		$7,623.00
Sub-Total Other Operating Items		$363,297.00
Office Equipment		$4,567.00
Medical Equipment		$12,500.00
Sub-Total Equipment		$17,067.00
TOTAL		$900,364.00

Answer 1

Projected Budget
Particulars	8 Month Actual	Projected 2016	Budget 2017
Salaries	$400,000.00	$600,000.00	$625,200.00
Federal and NY Tax	$64,000.00	$96,000.00	$100,032.00
Benefits	$56,000.00	$84,000.00	$87,528.00
Sub-Total Salaries and Benefits	$520,000.00	$780,000.00	$812,760.00
Rent	$65,000.00	$97,500.00	$97,500.00
Electric	$6,000.00	$9,000.00	$9,450.00
Natural Gas	$3,900.00	$5,850.00	$6,142.50
Patient Supplies	$10,000.00	$15,000.00	$15,750.00
Drugs	$12,500.00	$18,750.00	$20,418.75
Sutures and Casts	$5,003.00	$7,504.50	$7,879.73
Pt. Medical Equip.	$675.00	$1,012.50	$1,063.13
Pt. Food	$2,596.00	$3,894.00	$4,088.70
Physician Services	$250,000.00	$375,000.00	$375,000.00
Miscellaneous	$7,623.00	$11,434.50	$12,006.23
Sub-Total Other Operating Items	$363,297.00	$544,945.50	$549,299.03
Office Equipment	$4,567.00	$11,850.50	$11,850.50
Medical Equipment	$12,500.00	$18,750.00	$18,750.00
Sub-Total Equipment	$17,067.00	$30,600.50	$30,600.50
TOTAL	$900,364.00	$1,355,546.00	$1,392,659.53