Budgeting & Finance - Healthcare Please provide formula(s) as work needs to be t
ID: 2784481 • Letter: B
Question
Budgeting & Finance - Healthcare Please provide formula(s) as work needs to be transferred to excel.
Cost Behavior:
Case Study:
Your are the business administrator for the mother baby unit at Our Lady of Mercy Women’s Hospital. To encourage exclusive breastfeeding the state decides to reimburse hospitals for home visits by a lactation consultant. OLM hospital wants to consider participating in this state funded program and asks you to prepare the business case for the senior leadership. You decide to perform a CVP analysis with an executive summary. Your CVP graph is pictured below. The revenue is listed on the y-axis (vertical) and the visits are listed on the x-axis (horizontal). Total costs and total revenue is listed in the table in rows 2 and 3 respectively.
In your analysis you might want to discuss the following: What is the unit sale price? What is the cost per unit? What is the fixed cost? What is the break-even point?
$40,000 $35,000 $30,000 $25,000 $20,000 $15,000 $10,000r $5,000 Costs -Revenue 500 | 1,000 | 1,500 | 2,00 2,500 | 3,000 3,500 Costs $10,000 $12,500 $15,000 $17,500 $20,000 $22,500 $25,000 $27,500 Revenue$0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000Explanation / Answer
Requirement 1:
Computation of Sale Price Per Unit
A
Sales in Units
500
1,000
1,500
2,000
2,500
3,000
3,500
B
Revenue
$ 5,000
$ 10,000
$ 15,000
$ 20,000
$ 25,000
$ 30,000
$ 35,000
C=B/A
Sales Price per Unit
$ 10
$ 10
$ 10
$ 10
$ 10
$ 10
$ 10
Selling Price Per unit=$10.00
Requirement 2:
Cost at 0 units is fixed Cost ,that $10,000
Computation of Fixed Cost
A
Total Cost
$ 10,000
$ 12,500
$ 15,000
$ 17,500
$ 20,000
$ 22,500
$ 25,000
$ 27,500
B
Less: Fixed Cost
$ (10,000)
$ (10,000)
$(10,000)
$(10,000)
$ (10,000)
$ (10,000)
$ (10,000)
$(10,000)
C=A-B
Variable Cost
$ -
$ 2,500
$ 5,000
$ 7,500
$ 10,000
$ 12,500
$ 15,000
$ 17,500
D
Sales in Units
0
500
1,000
1,500
2,000
2,500
3,000
3,500
E=C/D
Variable Cost Per Unit
$ 5
$ 5
$ 5
$ 5
$ 5
$ 5
$ 5
Variable Cost per Unit=$5.00
Requirement 3:
Fixed Cost=$10,000
Requirement 4:
Computation of Contribution per Unit
Selling Price Per Unit
$ 10
Variable Cost per Unit
$ (5)
Contribution per Unit
$ 5
Breakeven Point in units = Fixed Cost/ Contribution per Unit=$10,000/$5.00=2,000 units
Break even sales in units =2,000 x $10.00=$20,000
Computation of Sale Price Per Unit
A
Sales in Units
500
1,000
1,500
2,000
2,500
3,000
3,500
B
Revenue
$ 5,000
$ 10,000
$ 15,000
$ 20,000
$ 25,000
$ 30,000
$ 35,000
C=B/A
Sales Price per Unit
$ 10
$ 10
$ 10
$ 10
$ 10
$ 10
$ 10
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