Budget Development-3+ pages

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Activity Instructions: Budget Development

You are the Director of Budgeting and Reimbursement at Blank County Hospital in Blair, Wisconsin. The head of the Podiatry Department, Dr. P. Bunyon, is requesting your assistance in preparing his department budget for fiscal year end 2005. He presents you with the following information for the past year. Your Activity responses should be both grammatically and mechanically correct, and formatted in the same fashion as the Activity itself. If there is a Part A, your response should identify a Part A, etc. In addition, you must appropriately cite all resources used in your response and document in a bibliography using APA style. (A 3-page response is required for the combination of parts A, B, and C.)

Table 3: Blank County Hospital Data

Part A	Based upon the 2004 data outlined above, perform the following. (20 points)
	1.	Define and identify the variable, fixed, and mixed costs for fiscal year 2004. Explain why you categorized them as you have.
	2.	From a budgeting perspective, explain the significance of accurately classifying each type of cost.

Part B	Calculate the following (be sure to include all supporting computations). (35 points)
	1.	The RN’s hourly salary for fiscal year 2004
	2.	The CMA’s hourly salary for fiscal year 2004
	3.	The PA’s hourly salary for fiscal year 2004
	4.	The per unit (patient visit) cost of supplies for fiscal year 2004
	5.	The per unit (kilowatt hour) cost of the variable component of electricity for fiscal year 2004
	6.	The per unit (gallon) cost of the variable component of water for fiscal year 2004
	7.	The per unit (patient visit) amount of revenue for fiscal year 2004

Part C	Using a flexible budget approach, develop a 2005 pro forma Income Statement. Use the pro forma Income Statement on the next page as your guideline. Show your calculations in the margins. The worksheet/assumptions you need to consider are contained below. (45 points)
	1.	Volume for 2005 will be 6,500 patient visits.
	2.	There will be a 5% increase in reimbursement per patient visit.
	3.	There will be no increase in fixed costs.
	4.	There will be no increase in the fixed cost component of any of the mixed costs.
	5.	MidAm Energy estimates the clinic’s electrical usage to be 150,000 kilowatt hours, with no increase in the variable rate.
	6.	The Blair County water department estimates the clinic’s water usage to be 50,000 gallons, with no increase in the variable rate.
	7.	Medical supplies and salaries will increase in price by 3%.