bellaire clinical labs

.docx

School

York University *

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Course

2700

Subject

Management

Date

Apr 3, 2024

Type

docx

Pages

7

Uploaded by BaronCrocodile853

SCHOOL OF CONTINUING STUDIES POST-GRADUATE CERTIFICATE IN ACCOUNTING Bellaire Clinical Labs Inc. Prepared by Ayesha Halari Student number – 220830790
INTRODUCTION In 1998, the US market for clinical laboratory testing was estimated to be worth $30 billion. A superb small independent clinical laboratory that is privately owned and situated outside of Boston, Massachusetts is called Bellaire Clinical Labs Inc. For three different client groups, the lab offers variable pricing packages along with routine blood testing and specialty testing: physicians, particular patients, and outside parties (private insurance companies, Medicaid, or Medicare). Only a year ago, Marty Walters was brought on board as the lab's operations manager due to his proficiency in implementing big process modifications to cut down on material use and waste and routinely praising staff members' efforts to boost productivity. A review of the 1998 financial data, however, showed that there were no appreciable profit figures and that actual net revenue was about $1 million higher than projected revenue. The net profit only increased by $6363 compared to the projected amount. The causes are still unknown and require close examination. PROBLEM STATEMENT How did Bellaire maintain making such frequent process improvements? was able to sustain its profits while bringing in an extra US$1 million in sales? Why did a $1 million US increase in sales translate into a meagre $6363 profit over the estimated amount?
Calculating the difference between Actual Revenue and Planned Revenue Particulars Actual Revenue $ Planned Revenue $ Difference/ variance Net Revenue Routine Testing 11676904 12160000 -483096 Unfavorable Speciality Testing 5709496 4240000 1469496 Favorable Total Net Revenue 17386400 16400000 986400 Favorable Analysis Budgeted Test Volumes for 1998 Clients Routine Specialty Total Patient 160,000 40,000 200,000 Physician 400,000 100,000 500,000 Other Party 240,000 60,000 300,000 Total 1,000,000 Actual Test Volumes for 1998 Clients Routine Specialty Total Patient 152,440 53,560 206,000 Physician 335,368 117,832 453,200 Other Party 274,392 96,408 370,800 Total 1030000 Test prices for 1998 Clients Routine Specialty Patient $17.00 $23.00 Physician $14.00 $20.00 Other Party $16.00 $22.00
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