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4 October, 18:26

Here are the 2015 revenues for the Wendover Group Practice Association for four different budgets (in thousands of dollars):

Static Budget Flexible (Enrollment / Utilization) Budget Flexible (Enrollment) Budget Actual Results

$425 $200 $180 $300

a. What do the budget data tell you about the nature of Wendover's patients: Are they capitated or fce-for-service?

b. Calculate and interpret the following variances: Revenue variance Volume variance Price variance Enrollment variance Utilization variance

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Answers (2)
  1. 4 October, 21:48
    0
    Kindly check Explanation

    Explanation:

    The difference between capita tes and fee-for-service is how payment is made, In capitates, a fixed annual amount is paid whereby In fee-for-service, payment is made separately for each service demanded. Thus it could be concluded from the data they the patients are fee-for - service due to the difference in the static and actual figure provided.

    Given the following:

    Static Budget - $425

    Flexible (Enrollment / Utilization) - $200

    Budget Flexible (Enrollment) Budget - $180

    Actual Results - $300

    B)

    Revenue variance = (Actual Revenues - Static Revenue)

    Revenue variance = ($300-$425) = - $125 (Unfavorable)

    This shows that the Wendover have less patients who use the services.

    Volume variance = (Flexible Revenues (enrollment and utilization) - Static Revenues)

    Volume variance = ($200 - $425) = - $225

    Price variance = (Actual Revenues - Flexible Revenue)

    Price variance = ($300 - $200)

    Price variance = $100 F

    Price variance is favorable which means service charge is high.

    Enrollment variance = (Flexible Revenues (enrollment) - Static Revenue)

    Enrollment variance = $180 - $425 = - $245

    Utilization variance = Flexible revenues (enrollment/utilization) - Budget Flexible (Enrollment) Budget

    $200 - $180 = $20
  2. 4 October, 22:22
    0
    Answer: The answer is provided below

    Explanation:

    a). The revenue here shows that

    Wendover's patients were capitated. The is because the actual revenue figures were assumed to be $180, but it

    later came to $300 which means that the revenue increased.

    The reason is that a capitated patient provides fixed payment a year, while a fee for service client pays per usage. With this explanation, it can be concluded that majority of Wendover's patients are fee for service because the difference between static results and the actual results is very high.

    ) 1. Revenue variance

    = Actual Revenues - Static budget

    = $ 300 - $ 425

    = - $125

    2. Volume variance

    = Flexible Revenue - Static Budget

    = $ 200 - $ 425

    = - $ 225

    3. Price Variance

    = Actual Revenues - Flexible Revenues

    =$300 - $200

    = $100

    4. Enrollment variance

    = Flexible Revenues - Static Budget

    = $ 180 - $ 425

    = - $ 245

    5. Utilization variance

    = Flexible Revenue - Flexible Budget

    = $ 200 - $ 180

    = $ 20
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