Question

The urgent care manager must resubmit her budget based on 2018 projected visits. The 2018 budget should be based on actual expenses and visits incurred during the first seven months of 2017. Cost standards (2017) and budget standards (2018) must be prepared for all variable costs (indicated by a V behind the object code description). All fixed costs (F) should be projected using the incremental budgeting methodology. Projected visits is 2018 is 52,560. Salary and fringe benefit (object codes 4000-4199) increases for all personnel should be estimated at 4.0% except for health insurance (4120) which is expected to increase by 8%. Input price increases for supplies and other costs (4200-4960) should be increased by 3% except for medications, 5% increase and profession insurance, 10%. All increases are effective January 1, 2015. The budget report, BudgetCh06, Problem 6.1 tab, shows the urgent care centers expenses for 2016 and the actual and budgeted expenses for the first seven months of 2017. The CEO has requested all department heads submit their 2015 operating budget by Wednesday, March 21, 2014. The 2018 fiscal year begins January 1, 2018.

Total Visits		51,986	30,331	30,672	52,560
Obj.Code	Description	2016	Actual 2017	Budget 2017	Budget 2018
4010	Physician salaries – V	$960,000	$585,306	$576,800	________
4020	Nursing staff salaries – V	1,380,000	857,157	829,150	________
4030	Management & clerical salaries – F	780,000	466,971	468,650	________
4110	FICA – F	238,680	143,397	143,407	________
4120	Health Insurance – F	390,000	238,760	234,325	________
4130	Retirement – F	124,800	76,763	74,984	________
4140	Unemployment – F	31,200	18,323	18,746	________
4211	Medications – V	148,152	91,687	89,015	________
4212	Medical instruments - V	102,792	64,287	61,761	________
4214	Bandages, gauze… - V	57,468	34,140	34,529	________
4216	Latex gloves, gowns… - V	40,416	24,476	24,283	________
4216	Sterile wipes – V	26,820	15,780	16,114	________
4250	Office supplies – V	115,200	69,388	69,216	________
4280	Cleaning supplies – V	39,048	23,103	23,461	________
4310	Rent – F	144,000	89,251	86,520	________
4350	Maintenance – F	13,764	11,245	8,270	________
4410	Electricity – F	10,788	6,684	6,482	________
4420	Gas – F	18,504	11,215	11,118	________
4430	Water and Sewage – F	6,756	4,225	4,059	________
4440	Telephone – F	3,228	2,004	1,939	________
4930	Housekeeping – F	36,000	21,694	21,630	________
4940	Travel/professional meetings/meals – F	7,908	4,744	4,751	________
4945	Professional Insurance – F	22,380	15,669	13,447	________
4950	CME – F	29,856	17,994	17,938	________
4960	Other expenses - F	57,732	35,955	34,687	________
		$4,785,492	$2,930,217	$2,875,283	________

B. Compare and contrast the incremental budget (prepared in homework 4) and the flexible budget.

C. Assume 2015 has been completed and actual output is 53,011, restate (or flex) the budget, what is the final budget the manager will be accountable to?

D. Assume 2015 has been completed and actual output is 51,543, restate the budget what is the final budget the manager will be accountable to?

Answer 1

Ans (b) = Budget 2018 - Budget 2017