The hospital offers various services. The data below shows the costs and utiliza
ID: 2643857 • Letter: T
Question
The hospital offers various services. The data below shows the costs and utilization of the department for a year.
Service
Variable cost
Annual direct costs
Annual # of visits
Basic exam
$ 2.00
100,000
5,000
advanced exam
$ 5.00
50,000
2,000
radiation therapy
$ 10.00
200,000
3,000
What is the fee schedule of the goal is to cover only variable and direct fixed costs?
Assume that the financial department allocated $50,000 in overhead to the three departments on the basis of number of visits. What is the fee schedule needed to cover all costs (total costs?)
Assume that the three departments must make a combined profit of $50,000. What is the new fee schedule? Use the annual number of visits to allocate the profit between the three departments.
Service
Variable cost
Annual direct costs
Annual # of visits
Basic exam
$ 2.00
100,000
5,000
advanced exam
$ 5.00
50,000
2,000
radiation therapy
$ 10.00
200,000
3,000
Explanation / Answer
a)
cost of basic exam = 5000 * 2 + 100000 = 110000
fee of basic exam = 110000/5000 = $22
cost of advanced exam = 2000 *5 + 50000 = 60000
fee of basic exam = 60000/2000 = $30
cost of radiation therapy = 3000 * 10 + 200000 = 230000
fee of basic exam = 230000/3000 = $76.67
b)
overhead allocated on basis number of visits
number of vists = 5000 + 2000 + 3000 = 10000
per visit allocation = 50000/10000 = 5
fee of basic exam = 22 -5 = $17
fee of advanced exam = 30 -5 = $25
fee of radiation therapy = 76.67 -5 = $71.67
c)
profit from each visit = 50000/10000 = 5
fee of basic exam = 17 +5 = $22
fee of advanced exam = 25 +5 = $30
fee of radiation therapy = $71.67 +5 = $76.67
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.