Bellaire Clinical Labs, Inc. Case

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

Sales 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, routine 80%
% test, specialty 20%
% test paid for by physician 50%
% test paid for by patient 20%
% test paid for by other parties 30%
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