Your department has performed 20,000 procedures during the first six months (Jan

Question

Your department has performed 20,000 procedures during the first six months (January–June) of 20X1. Spending during that period of time was $210,000 for fixed expense items and $1,200,000 for variable expense items. Of those amounts, $50,000 of fixed expense money was spent on preparing for a Joint Commission survey. On November 1st, two new procedure technicians will begin work. The salary and fringe benefit costs for each are $96,000/year. Based on the information provided, prepare an expense forecast for 20X1.

Explanation / Answer

Annualized expenses Fixed expenses Joint Commission survey expenses 50000 $        50,000.00 salary and fringe benefit costs for new technicians 96000*2*2/12 $        32,000.00 Other fixed expenses (210000-50000)*12/6 $      320,000.00 Total fixed expenses $      402,000.00 Variable expense 1200000*40000/20000 $ 2,400,000.00

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