# HSM 695 University of Central Florida Healthcare Finance Problems Spreadsheet

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kbkb124

Mathematics

HSM 695

University of Central Florida

HSM

## Description

Use Excel

• Chapter 8: problems: 8.3(b);8.6a
• Chapter 9: problems : 9.1 a,b,c, & d; 9.3; 9.4a & b

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8.3. Here are the budgets of Brandon Surgery Center for the most recent historical quarter (in thousands of dollars): Actual 1,300 Number of surgeries Patient revenue Salary expense Nonsalary expense Profit Static 1,200 \$2,400 1,200 600 \$ 600 Flexible 1,300 \$2,600 1,300 650 \$2,535 1,365 585 \$ 585 \$ 650 The center assumes that all revenues and costs are variable and hence tied directly to patient volume. b. Determine the variances for each line of the profit and loss statement, both in dollar terms and in percentage terms. (Hint: Each line has a total variance, a volume variance, and a price variance [for revenues) or management variance (for expenses].) 8.6. Chelsea Clinic projected the following budget information for 2020: 90,000 visits 40% 60% \$25 per visit \$20 per visit Total FFS Visit Volume Payer Mix: Blue Cross Highmark Reimbursement Rates: Blue Cross Highmark Variable Costs Resource Inputs: Labor Supplies Resource Input Prices: Labor Supplies Fixed Costs (overhead, plant, and equipment) 48,000 total hours 100,000 total units \$25.00 per hour \$1.50 per unit \$500,000 a. Construct Chelsea Clinic's operating budget for 2020. Problems 9.1. Find the following values for a lump sum assuming annual compounding: a. The future value of \$500 invested at 8 percent for one year b. The future value of \$500 invested at 8 percent for five years c. The present value of \$500 to be received in one year when the opportunity cost rate is 8 percent d. The present value of \$500 to be received in five years when the opportunity cost rate is 8 percent 9.3. What is the effective annual rate (EAR) if the stated rate is 8 percent and compounding occurs semiannually? Quarterly? 9.4. Find the following values assuming a regular, or ordinary, annuity: a. The present value of \$400 per year for ten years at 10 percent b. The future value of \$400 per year for ten years at 10 percent
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8.3 Here are the budgets of Bardon Surgery Center for the most recent historical quarter
(in thousands of dollar):
STATIC
FLEXIBLE
ACTUAL
Number of surgeries
1200
1300
1300
Patient revenue
\$2400
\$2600
\$2535
Salary expense
1200
1300
1365
Nonsalary expense
600
650
585
Profit
\$600
\$650
\$585
The center assumes that all revenues and costs are variable and hence tied directly to patient
volume.
b. Determine the variances for each line of the profit and loss statement, both in dollar terms and
in percentage terms. (Hint: Each line has a total variance, a volume variance, and a price
variance [for revenues] or management variance [for expenses].)
TOTAL
VARIANCE
\$
%
\$135,000. 5.63%

Patient
Revenue
Salary
\$165,000 13.75%
Expense
Nonsalary
-\$15,000
-2.50%
Expense
Profit
-\$15,000
-2.50%
COMPUTATION:

VOLUME
VARIANCE
\$
%
\$200,000 8.33%

MANAGEMENT
VARIANCE
\$
%
-\$65,000
-2.71%

CHECK
CALCULATION
\$
%
\$135,000
5.63%

\$100,000 8.33%

\$65,000

5.42%

\$165,000

13.75%.

\$50,000

8.33%

-\$65,000

-10.83%

-\$15,000

-2.50%

\$50,000

8.33%

-\$65,000

-10.83%

-\$15,000

-2.50%

Patient Revenue
• Dollar total variance
(Actual budget amount) \$2,535,000 – (Static budget amount) \$2,400,000 = \$135,000.
• % Total variance
\$135,000 / \$2,400,000 = 0.0562 = 5.63%
• Dollar volume variance
(Flexible budget amount) \$2,600,000 – (Static budget amount) \$2,400,000

= \$200,000

• % Volume variance
\$200,000 / \$2,400,000 = 0.0833 = 8.33%
• Dollar management variance
(Actual budget amount) \$2,535,000 – (Flexible budget amount) \$2,600,000 = -\$65,000

% Management variance

-\$65,000 / \$2,400,000 = -0.0271 = -2.71%
• Dollar check calculation
\$200,000 + (-\$65,000) = \$135,000
• % Check calculation
8.33% + (-2.71%) = 5.63%
Salary Expense
• Dollar total variance
(Actual budget amount) \$1,365,000 – (Static budget amount) \$1,200,000 Profit= \$165,000
• % Total variance
\$165,000 / \$1,200,000 = 0.1375 = 13.75%
Dollar volume variance
(Flexible budget amount) \$1,300,000 – (Static budget amount) \$1,200,000= \$100,000
• % Volume variance
\$100,000 / \$1,200,000 = 0.0833 = 8.33%
• Dollar management variance
(Actual budget amount) \$1,365,000 – (Flexible budget amount) \$1,300,000 = \$65,000
• % Management variance
\$65,000 / \$1,200,000 = 0.0542 = 5.42%
• Dollar check calculation
\$100,000 + \$65,000 = \$165,000
• % Check calculation
8.33% + 5.42% = 13.75%
Non-Salary Expense
Dollar total variance = Actual budget amount – Static budget amount
(Actual budget amount) \$585,000 – (Static budget amount) \$600,000 = -\$15,000
• % Total variance
-\$15,000 / \$600,000 = -0.025 = -2.50%
• Dollar volume variance
(Flexible budget amount) \$650,000 – (Static budget amount) \$600,000= \$50,000
• % Volume variance
\$50,000 / \$60...

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