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Compare and contrast an incremental budget and a flexible budget.

The urgent care manager must resubmit her budget based on 2015 projected visits. The 2015 budget should be based on actual expenses and visits incurred during the first seven months of 2014. Cost standards (2014) and budget standards (2015) must be prepared for all variable costs (indicated by a V behind the object code description). All fixed costs (F) should be projected using the incremental budgeting methodology. Projected visits is 2015 is 52,560. Salary and fringe benefit (object codes 4000-4199) increases for all personnel should be estimated at 4.0% except for health insurance (4120) which is expected to increase by 8%. Input price increases for supplies and other costs (4200-4960) should be increased by 3% except for medications, 5% increase and profession insurance, 10%. All increases are effective January 1, 2015. The budget report, BudgetCh06, Problem 6.1 tab, shows the urgent care centers expenses for 2013 and the actual and budgeted expenses for the first seven months of 2014. The CEO has requested all department heads submit their 2015 operating budget by Tuesday, November 4, 2014. The 2015 fiscal year begins January 1, 2015.

Total Visits51,98630,33130,67252,560
Obj.CodeDescription2013Actual 2014Budget 2014Budget 2015
4010Physician salaries – V$960,000$585,306$576,800________
4020Nursing staff salaries – V1,380,000857,157829,150________
4030Management & clerical salaries – F780,000466,971468,650________
4110FICA – F238,680143,397143,407________
4120Health Insurance – F390,000238,760234,325________
4130Retirement – F124,80076,76374,984________
4140Unemployment – F31,20018,32318,746________
4211Medications – V148,15291,68789,015________
4212Medical instruments – V102,79264,28761,761________
4214Bandages, gauze… – V57,46834,14034,529________
4216Latex gloves, gowns… – V40,41624,47624,283________
4216Sterile wipes – V26,82015,78016,114________
4250Office supplies – V115,20069,38869,216________
4280Cleaning supplies – V39,04823,10323,461________
4310Rent – F144,00089,25186,520________
4350Maintenance – F13,76411,2458,270________
4410Electricity – F10,7886,6846,482________
4420Gas – F18,50411,21511,118________
4430Water and Sewage – F6,7564,2254,059________
4440Telephone – F3,2282,0041,939________
4930Housekeeping – F36,00021,69421,630________
4940Travel/professional meetings/meals – F7,9084,7444,751________
4945Professional Insurance – F22,38015,66913,447________
4950CME – F29,85617,99417,938________
4960Other expenses – F57,73235,95534,687________
$4,785,492$2,930,217$2,875,283________

B. Compare and contrast the incremental budget (prepared in homework 4) and the flexible budget.

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C. Assume 2015 has been completed and actual output is 53,011, restate (or flex) the budget, what is the final budget the manager will be accountable to?

D. Assume 2015 has been completed and actual output is 51,543, restate the budget what is the final budget the manager will be accountable to?

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