Budgeting Classwork for Management Class
Version 1
Budget Exercise In-class
You are preparing the budget for next year, you have been told the following by the finance department:
· Expect a 4% increase in private insurance
· Expect a 3% increase in self pay
· Expect to receive 2.5% less income from Medicare
· Expect to receive 1% less income from HMO patients
· Your office received a notice that there will be a 4% increase in rent
· Wages are expected to increase by 1.25%. This will also increase the Holiday and Vacation totals. Your office strives to maintain or reduce OT and sick time.
Once you have made all the adjustments determine if you made a profit or loss. If a loss, what adjustments will you need to make to balance the budget or even project a profit? Make at least three line item adjustments and indicate a rational for each line item.
Class Budget Exercise Worksheet
Expect a 4% increase in private insurance
Expect a 3% increase in self pay
Self-pay is $28,300
Expect to receive 2.5% less income from Medicare
Medicare is $105,000
Expect to receive 1% less income from HMO patients
HMO is $55,000
There will be a 4% increase in rent
Rent is $23,500
Wages are expected to increase by 1.25%
Wages are $150,600
Holiday increase by 1.25%
Holiday is $14,000
Vacation increase by 1.25%
Vacation is $27,000