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Preparing an Operating Budget

Preparing an Operating Budget

Preparing an Operating Budget

Scenario

One year ago, Metropolitan Memorial expanded its operations into a rural community located approximated a hundred miles from its main facility. The clinic offers a wide array of outpatient services. As the Senior Accountant, you are reviewing the clinic’s operating budget from the previous year. You have been asked by the hospital’s chief administrator to create a new six-month operations budget for the clinic.

See attached.

 

Instructions

Using an Excel spreadsheet, create a new six-month budget for the clinic that includes the following revenue and expense projections:

  • The clinic’s revenue is projected to grow by approximately 3% as a result of a new managed care contract.
  • The cost of expenses is expected to increase to 1.5%.
  • The clinic will also be adding a new roof to the facility at a projected cost of $50,000.

Then prepare a memo for the chief administrator. The memo should include a review of the previous year’s budget, an analysis of the upcoming changes (figures above), and a discussion about the impacts that these changes will have on the budget for the upcoming year.


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