Question

Tallahassee Clinic projected the following budget information for 2018:

Total FFS Visit Volume	90,000 visits
Payer Mix:
Blue Cross	40%
Celtic Insurance Company	60%
Reimbursement Rates:
Blue Cross	$25 per visit
Celtic Insurance Company	$20 per visit
Variable Costs – Resource Inputs:
Labor	48,000 total hours
Supplies	100,000 total units
Variable Costs – Input Prices:
Labor	$25 per hour
Supplies	$1.50 per unit
Fixed Costs (overhead, plant, and equipment)	$500,000

Construct Tallahassee Clinic’s static operating budget for 2018. (See Exhibit 8.3, page 283. Note that there are four components that need to be included: Volume Assumptions, Revenue Assumptions, Cost Assumptions, and the Pro Forma Profit and Loss or P&L projected Statement.)

Answer 1

Tallahassee Clinic Static Operating Budget For the year ended December 31, 2018
	Blue Cross	Celtic Insurance Company	Total
Visit Volume	36,000	54,000	90,000
Reimbursement Rate	$ 25	$ 20
Total Revenue	$ 900,000	$ 10,80,000	$ 1,980,000
Less: Variable Costs
Labor			1,200,000
Supplies			150,000
Total Variable Costs			1,350,000
Contribution Margin			630,000
Fixed Costs			500,000
Net Operating Income			130,000