Budgeting is a process to prepare the financial statement by the manager to estimate the organization’s future actions. It is also helpful to satisfy the everyday activities. To explain: the budgeting methods that are being used under the new approach.

Question

Mellow Clinic bases its budgets on patient-visits. The clinic has provided the following data concerning the formulas it uses in its budgetir Variable element per Fixed element per month patient-visit $60.00 Revenues Personnel expenses Medical supplies $24,000 $6.60 $2.40 $6,000 $5,000 Occupancy expenses Administrative expenses The behaviour of the revenue and expenses is valid for between 1,500 and 4,000 patient-visits per month. Required: ) Prepare a flexible budget for 2,000 and 3,000 patient-visits in a month. (14 marks) You may not need to use all the cells. Patient -visits 10 The behaviour of the revenue and expenses is valid for between 1.500 and 4,.000 patient-visits per month 11 12 Required: 13 a) Prepare a flexible budget for 2,000 and 3,000 patient-visits in a month. (14 marks) You may not need to use all the cells. 14 is Patient -visits Variable element per month 2,000 3,000 Revenues Less: variable expenses Medical supplies Occupancy expenses Total variable expenses…

Answer 1

Question

Chapter 22, Problem 22.4CP

a.

To determine

Budgeting is a process to prepare the financial statement by the manager to estimate the organization’s future actions. It is also helpful to satisfy the everyday activities.

To explain: the budgeting methods that are being used under the new approach.

b.

To determine

To explain: the reason for these methods being superior to the former approach.

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Mellow Clinic bases its budgets on patient-visits. The clinic has provided the following data concerning the formulas it uses in its budgetir Variable element per Fixed element per month patient-visit $60.00 Revenues Personnel expenses Medical supplies $24,000 $6.60 $2.40 $6,000 $5,000 Occupancy expenses Administrative expenses The behaviour of the revenue and expenses is valid for between 1,500 and 4,000 patient-visits per month. Required: ) Prepare a flexible budget for 2,000 and 3,000 patient-visits in a month. (14 marks) You may not need to use all the cells. Patient -visits 10 The behaviour of the revenue and expenses is valid for between 1.500 and 4,.000 patient-visits per month 11 12 Required: 13 a) Prepare a flexible budget for 2,000 and 3,000 patient-visits in a month. (14 marks) You may not need to use all the cells. 14 is Patient -visits Variable element per month 2,000 3,000 Revenues Less: variable expenses Medical supplies Occupancy expenses Total variable expenses…

Casper Hospital bases its budgets on patient-visits. The hospital's static planning budget for May appears below: The budgeted number of patient-visits 5,100 Budgeted variable costs: Supplies (@ $2.70 per patient-visit) $ 13,770 Laundry (@ $3.00 per patient-visit) 15,300 Budgeted fixed costs: Wages and salaries 16,830 Occupancy costs 16,890 Total expense $ 62,790 Required: Prepare a flexible budget for 6,000 patient-visits per month.

Children's Hospital of the King's Daughters Health System in Norfolk, Virginia, introduced a new budgeting method that allowed the hospital's annual plan to be updated for changes in operating plans. For example, if the budget was based on 400 patient-days (number of patients × number of days in the hospital) and the actual count rose to 450 patient-days, the variable costs of staffing, lab work, and medication costs could be adjusted to reflect this change. The budget manager stated, “I work with hospital directors to turn data into meaningful information and effect change before the month ends.” What budgeting method is being used under the new approach? What budgeting method do you think was being used under the old method?