Reference no: EM133005111

Question - Budget Exercise Instructions - The preliminary budget for adding a school sports physical exam to the practice using the following assumptions:

Time frame: one (1) month before the fall season starts (July 30 - ending August 30), and one (1) month before the winter season starts (October 20 - ending November 20).

You should expect the practice to be able to complete one physical exam every 20 minutes (check-in to check-out), with physical exams offered on Tuesdays and Thursdays. The practice will dedicate two (2) exam rooms for these physicals with a physician assistant covering both rooms, assisted by a MA in each room. A practicing physician must review and sign off on the PA exam (5 min).

The practice will charge 25 % over costs. Include labor +30 % fringe costs, consumable supplies of 20 % labor costs, and overhead of 10 % of labor costs. You must set the price and forecast total revenue assuming 70 % booking levels on all days.

Forecast revenue and expenses for this project and provide a recommendation as to whether this is a worthwhile endeavor.

1. Calculate the number of Tuesdays and Thursdays in the two-month periods.

2. Determine how many hours each Tuesday and Thursday you will be open for sports physical exams.

3. Look on the internet to find the wage rates for MA, PA, and MD.

4. Multiply the wage rate by the number of total hours the MA and PA will perform exams.

5. Since each exam takes 20 minutes, divide 60 minutes by 20 minutes to determine how many total exams you can do in the two months (# of exams per hour X number of total hours in #2 above).

6. Remember that it only takes the MD 5 minutes to review each exam, so multiply the total number of exams in # 5 above X 5 mins and divide by 60. This will give you the total number of hours for the MD and then multiply the wage rate for MD times the number of hours.

7. Add the total wages of the 2 MAs and 1 PA and MD - then add 30% for fringe = total labor.

8. Multiply total labor times .10 for overhead and times .2 for consumable supplies.

9. Add total labor, overhead, and supplies to give you the total cost.

10. Divide the total cost by # of exams to give you a cost per exam.

11. Multiply # exams by .70 to give you the number of exams you can do conservatively.

12. Multiply the cost per exam times .25 to give you the price per exam.

13. Multiply # of exams in #11-time price. This gives you total revenue.