Budgeting Purchases, Revenues, Expenses, and Cash in a Service Organization Wauconda Medical Center is located in a sum
Posted: Sun Apr 17, 2022 6:26 pm
Budgeting Purchases, Revenues, Expenses, and Cash in a
Service Organization
Wauconda Medical Center is located in a summer resort community.
During the summer months (June through August), the center operates
an outpatient clinic for the treatment of minor injuries and
illnesses. The clinic is administered as a separate department
within the hospital. It has its own staff and maintains its own
financial records. All patients requiring extensive or intensive
care are referred to other hospital departments.
An analysis of past operating data for the outpatient clinic
reveals the following:
• Staff: Seven full-time employees with total monthly salaries of
$42,000.
On a monthly basis, one additional staff member is hired for every
500 budgeted patient visits in excess of 3,000, at a cost of $7,000
per month.
• Facilities: Monthly facility costs, including depreciation of
$2,500, total $15,000.
• Supplies: The supplies expense averages $20 per patient visit.
The center maintains an end-of month supplies inventory equal to
10% of the predicted needs of the following month, with a minimum
ending inventory of $4,000, which is also the desired inventory at
the end of August.
• Additional variable patient costs, such as medications, are
charged directly to the patient by the hospital pharmacy.
• Payments: All staff and maintenance expenses are paid in the
month the cost is incurred. Supplies are purchased at cost directly
from the hospital with an immediate transfer of cash from the
clinic cash account to the hospital cash account.
• Collections: The average bill for services rendered is $75. Of
the total bills, 40% are paid in cash at the time the service is
rendered, 10% are never paid, and the remaining 50% are covered by
insurance. In the past, insurance companies have disallowed 30% of
the claims filed and paid the balance two months after services are
rendered.
• May 30 status: At the end of May, the clinic had $15,000 in cash
and supplies costing $5,000.
Budgeted patient visits for next summer are as follows:
Required
For the Wauconda Outpatient Clinic:
a. Prepare a supplies purchases budget for June,
July, and August with a total column.
Note: Do not use any negative signs with your
answers.
Wauconda Medical Center Outpatient Clinic Supplies Purchases Budget For June, July, and August June July August Required for patient visits $ 2,500 x $ 3,500 x $ 4,500 x $ Desired ending inventory 0 x ох 0 X Total requirements X X Less beginning inventory 5,000 7,000 9,000 Purchases $ 62,000 $ 72,000 $ 85,000 $ Total 11,000 x 0 x X 219,000
Total 11,000 x $75 825,000 Wauconda Medical Center Outpatient Clinic Revenue and Expense Budget For June, July, and August June July August Patient visits 3,000 3,500 4,500 Average bill per patient x $75 x $75 X $75 Total revenues $ 225,000 $ 262,500 $ 337,500 $ Expenses: Bad debts 0 X 0 X 0 X Disallowed claims 0 X 0 X Supplies 0 X 0 x Salaries 0X 0 x 0 X Facility costs 0 X OX 0X Total expenses X X Revenues less expenses $ X $ * $ X $ OX 0X 0X 0X 0X 0X 0X X X
August -40000 Total 0 x $ $ 135000 78750 Wauconda Medical Center Outpatient Clinic Cash Budget For June, July, and August June July Beginning cash balance (deficit) $ 15000 $ -11500 Cash receipts Services paid in cash (0.40) 90000 105000 Insurance receipts (2 months previous x 0.50 0.70) 0 0 Total cash receipts 90000 105000 Total cash available 105000 93500 Cash disbursements: Purchases 62000 72000 Salaries 42000 49000 Facilities less depreciation 12500 12500 Total cash disbursements 116500 133500 Ending (deficit) balance per computations $ -11500 $ -40000 0 x 213750 173750 X 85000 X 12500 X X $ 0 x
Service Organization
Wauconda Medical Center is located in a summer resort community.
During the summer months (June through August), the center operates
an outpatient clinic for the treatment of minor injuries and
illnesses. The clinic is administered as a separate department
within the hospital. It has its own staff and maintains its own
financial records. All patients requiring extensive or intensive
care are referred to other hospital departments.
An analysis of past operating data for the outpatient clinic
reveals the following:
• Staff: Seven full-time employees with total monthly salaries of
$42,000.
On a monthly basis, one additional staff member is hired for every
500 budgeted patient visits in excess of 3,000, at a cost of $7,000
per month.
• Facilities: Monthly facility costs, including depreciation of
$2,500, total $15,000.
• Supplies: The supplies expense averages $20 per patient visit.
The center maintains an end-of month supplies inventory equal to
10% of the predicted needs of the following month, with a minimum
ending inventory of $4,000, which is also the desired inventory at
the end of August.
• Additional variable patient costs, such as medications, are
charged directly to the patient by the hospital pharmacy.
• Payments: All staff and maintenance expenses are paid in the
month the cost is incurred. Supplies are purchased at cost directly
from the hospital with an immediate transfer of cash from the
clinic cash account to the hospital cash account.
• Collections: The average bill for services rendered is $75. Of
the total bills, 40% are paid in cash at the time the service is
rendered, 10% are never paid, and the remaining 50% are covered by
insurance. In the past, insurance companies have disallowed 30% of
the claims filed and paid the balance two months after services are
rendered.
• May 30 status: At the end of May, the clinic had $15,000 in cash
and supplies costing $5,000.
Budgeted patient visits for next summer are as follows:
Required
For the Wauconda Outpatient Clinic:
a. Prepare a supplies purchases budget for June,
July, and August with a total column.
Note: Do not use any negative signs with your
answers.
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Total 11,000 x $75 825,000 Wauconda Medical Center Outpatient Clinic Revenue and Expense Budget For June, July, and August June July August Patient visits 3,000 3,500 4,500 Average bill per patient x $75 x $75 X $75 Total revenues $ 225,000 $ 262,500 $ 337,500 $ Expenses: Bad debts 0 X 0 X 0 X Disallowed claims 0 X 0 X Supplies 0 X 0 x Salaries 0X 0 x 0 X Facility costs 0 X OX 0X Total expenses X X Revenues less expenses $ X $ * $ X $ OX 0X 0X 0X 0X 0X 0X X X
August -40000 Total 0 x $ $ 135000 78750 Wauconda Medical Center Outpatient Clinic Cash Budget For June, July, and August June July Beginning cash balance (deficit) $ 15000 $ -11500 Cash receipts Services paid in cash (0.40) 90000 105000 Insurance receipts (2 months previous x 0.50 0.70) 0 0 Total cash receipts 90000 105000 Total cash available 105000 93500 Cash disbursements: Purchases 62000 72000 Salaries 42000 49000 Facilities less depreciation 12500 12500 Total cash disbursements 116500 133500 Ending (deficit) balance per computations $ -11500 $ -40000 0 x 213750 173750 X 85000 X 12500 X X $ 0 x