8-12. (5 points) Prepare the simple budget for 2017 based on the following assum

Question

8-12. (5 points) Prepare the simple budget for 2017 based on the following assumptions (input simple budget into following table): * Discharges are estimated to increase by 5%. In 2016, total discharges was 2.000. * Reimbursement rate is expected to increase by 2%. * Medical supplies is the ONLY variable expense which is expected to increase by 3%. * Salaries and benefits will increase by 4%. All other expenses and non operating incomes are expected to remain flat with 2016 levels. 2017 Simple Budget (8-12.) (in thousands) 2016 Actuals 2017 Actuals 2017 Flexible 2017 Budget (13-15 Variance (Flex Budget) Net Patient Service $ 29,682 $29,979 Salaries and Benefits Medical Supplies Depreciation and Amortization Interest Expense Other Operating $13,440 $5,179 $14,112 $5,386 $1,465 $2,037 $1.49.4 $2,078 7.149 $29,270 $7,292 $30,362 Total Expenses Operating Income Non-Operating Income 412 310 $ (383) Net Income 17 Net Assets, Beginning ,333 Net Assets, Ending 13-15. (3 points) Prepare flexible budget assuming that actual discharges in 2017 were 1,990 and calculate variances from 2017 actuals. Input flexible budget and variances into table above.

Explanation / Answer

In thousands 2016 actuals 2017simple 2017 actuals 2017 flexible13.15 2017 variance(flex budget) % Revenues $29682 $29682 $29979 $297 Expenses Salaries and Benefits $13440 $13977 $14112 $135 Medical supplies $5179 $5334 $5386 $52 Depriciation and AMORTISATION $1465 $1494 $1494 --- Interest Expenses $2037 $2037 $2078 $41 Other operating Expenses $7149 $7292 $143 Total expenses $29270 $30362 $1092 Operating Income $412 $412 $383 -$29 Non operating Income $310 $400 -$90 Net Income $722 $17 -$705 Net Assets-beggining $4333 $4333 $5055 $722 Net Assets-Ending $5055 $5055 $5072 $17 total discharge $2000 $2100 $1990 $110

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