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Use the prompts provided on the second tab of the sample budget document to make adjustments to the Income Statement.
You may create your own Word document to communicate the findings and analysis from the 6 prompts in the student file, which should answer the following questions:
1. Please articulate how each scenario changes the company’s profitability.
2. Which budget categories were impacted by the changes?
3. What would have happened if the changes were implemented at the beginning of the year?
4. How would this company be impacted if all 6 scenarios took place in the same year?
| Prompt | Scenario | ||||||||
| #1 | The state Medicaid program provides notice that your Medical rates are being cut by 7% in September. However, they plan on increasing your Pharmaceutical reimbursement by 3% in January. | ||||||||
| #2 | The union that controls the workforce is demanding a 9.5% increase to salaries and wages to bring all employees back in alignment with market rates. The increase will go into effect in May. | ||||||||
| #3 | Your Pharmaceutical supplier terminates their agreement with your organization, forcing the organization to move their business to a competitor at a 2.7% cost increase starting in July. | ||||||||
| #4 | The Federal government passes legislation that raises the ceiling on FICA taxes, which increases your cost for Taxes by a full 1% point for the full year | ||||||||
| #5 | Your CEO decides to slash the employee benefit plan to save cost, reducing employer contributions in Feburary by 4% points. | ||||||||
| #6 | Your organization’s application for the American Rescue Plan Act (ARPA) was approved and $2M in funding will be dispersed to you in September. | ||||||||
| Questions: | Please articulate how each scenario changes the company’s profitability. Which budget categories were impacted by the changes? What would have happened if the changes were implemented at the beginning of the year? How would this company be impacted if all 6 scenarios took place in the same year? Please provide both quantitative as well as qualitative responses. | ||||||||
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