Bellaire Clinical Labs, Inc. Case

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1. Prepare a budgeted income statement for 2003 based on the information. You may want to re-list your assumptions. What additional assumptions did you have to make, if any? Bellaire Clinical Labs, Inc.

Budgeted Income Statement
For the year ended in 2003

Routine test
Physician pays $5,600,000
Patient pays 2,720,000
Other parties pay 3,840,000
Total Routine test 12,160,000
Specialty test
Physician pays 2,000,000
Patient pays 920,000
Other party pays 1,320,000
Total Specialty test 4,240,000
Total Sales 16,400,000
Cost of Sale
Direct material 2,700,000
Direct Labor 4,430,400
Depreciation Expense 3,500,000
Other Variable Overhead 806,000
Other Fixed Overhead 300,000
Total Cost of Sales 11,736,400

Gross Profit $4,663,600
General and Administrative Expenses
Salaries and Bonuses Expenses 700,000
Billing and Collection Expenses 1,850,000
Advertising and Promotion 820,000
Other Administrative Expenses 500,000 Total General and Administrative Expenses 3,870,000

Net Income $793,600

Assumptions to budgeted income statement:
Number of test per year 1,000,000
% test, routine80%
% test, specialty20%
% test paid for by physician50%
% test paid for by patient20%
% test paid for by other parties30%
Price, routine test
When physician pays $14.00
When patient pays $17.00
When other party pays $16.00
Price, specialty test
When physician pays $20.00
When patient pays $23.00
When other party pays $22.00
Direct material $2.70
Direct labor(annual labor hours...
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