NET REVENUE, FIXED AND VARIABLE COSTS, CASH FLOW, VOLUME BUDGET, AND STAFFING AND SUPPLIES BUDGET.
No one can predict the future, but accountants and financial managers must try and do exactly that! By examining net revenue, costs, and cash flow, you can get a clearer picture of what to expect in your organization’s (or one with which you are familiar) fiscal future. Using these metrics to look forward will enable you to more effectively plan budgets that accomplish organizational goals.
When developing a budget, what variables do you have to take into account? In health care organizations, two of the largest groups of factors that you must consider are first, volume, and second, staffing and supply. The number of patients and tests performed each day, as well as employees and their pay rates are all crucial pieces of information when determining a budget.
In this Assignment, you address five scenarios: net revenue, fixed and variable costs, cash flow, volume budget, and staffing and supplies budget.
Note: For those Assignments in this course that require you to perform calculations you must:
Use the Excel spreadsheet template for the Week 5 assignment.
Show all your calculations and formulas in the spreadsheet.
Answer any questions included with the problems (as text in the Excel spreadsheet).
A title and reference page are NOT needed in this assignment. Put your name and assignment at the top of the Excel spreadsheet.
For those not comfortable with the use of Microsoft Excel, this week’s Optional Resources suggest several tutorials.
To prepare:
Review the information in this week’s Learning Resources regarding net revenue, fixed and variable costs, and cash flow, and how they are used in financial decision making.
Review the budgeting information in Week 5 Learning Resources dealing with volume, staffing, and supplies budget.
Use the Week 5 Application Assignment Template, provided in this week’s Learning Resources, to complete this assignment. Carefully examine the information in each of the scenarios and provide the necessary calculations. Using this information will help you answer the questions.
Note: All the scenarios will be submitted as one document. Each scenario will be on a different tab in the spreadsheet.
Scenario 1: Net Revenue Scenario
Your clinic provides four kinds of services:
Comprehensive initial medical consultation is priced at $250
Established patient limited visit is priced at $75
Established patient intermediate visit is priced at $125
Established patient comprehensive visit is priced at $250
Question: The profile of your patients is such that the average collection rate is 75%. Assuming you have 100 visits of each type each month, what amount of new revenue will you generate in the next 12 months?
Scenario 2: Fixed/Variable Cost Scenario
You have performed a cost analysis of your health care organization and have determined the following: based on the latest three years of information, your annual cost of operations is $1,600,000 with annual volume of 10,000 procedures. You have determined that certain of your supply items are fixed in nature (those marked with an F) while others are variable (marked with a V).
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