2. You lab is going to start offering a new procedure. Here is the information you have about the test: Number of procedures performed per year: Equipment cost: Service contract: Expected useful life: Reagent cost: #of minutes to perform test Average wage: Medical supplies/total billable tests Nonmedical supplies/total billable tests Other expenses/total billable tests: 23,500 $105,000 $3500 each year for 7 years 7 years $22,000 per year 20.0 $20.75 per hour $0.28 $0.06 $0.05 Using this information, determine the cost of the test. Explain how you determined this cost. Explain how you arrived at this cost.

2. You lab is going to start offering a new procedure. Here is the information you have about the test: Number of procedures performed per year: Equipment cost: Service contract: Expected useful life: Reagent cost: #of minutes to perform test Average wage: Medical supplies/total billable tests Nonmedical supplies/total billable tests Other expenses/total billable tests: 23,500 $105,000 $3500 each year for 7 years 7 years $22,000 per year 20.0 $20.75 per hour $0.28 $0.06 $0.05 Using this information, determine the cost of the test. Explain how you determined this cost. Explain how you arrived at this cost.

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter3: Cost Behavior And Cost Forecasting

Section: Chapter Questions

Problem 36E

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Q. 2 New England Hospital Network (NEHN) is planning to install a state-of-the-art MRI system costing $1.500.000. It is expected to be used for 5 years and then sold for $200,000. NEHN uses a retum requirement of 20% per year for its medical diagnostic equipment. As an engineering management student currently serving a coop semester on the management staff of NEHN in Boston, you are asked to determine the minimum net revenue required each year to realize the expected recovery and return. 1. What is your answer? 2. If the annual operating cost is expected to be $90.000 per vear, what is the total revenue required to provide for recovery of capital. the 20% return, and the annual cxpenses?
2. You are considering starting a radiology practice. Your financial projections for the first year of operations are as follows (see problem 1): Number of visits Wages and benefits Medical supplies Rent Utilities Administrative supplies Totals Fixed $1,200,000 $0 $200,000 $36,000 $0 $1,436,000 0 2,500 5,000 7,500 10,000 12,500 24,000 visits 15,000 17,500 20,000 22,500 25,000 27,500 30,000 Variable $0 $300,000 $0 $0 Furthermore, assume that the group expects to perform 24,000 procedures in the coming year at an average of $150 per visit. a. Construct the group's base case projected P&L statement. (See exhibit 5-5). b. What is the group's contribution margin per visit? c. What is the group's breakeven point in volume (number of visits? d. What volume is required to provide an operating profit of $267,125? e. What is the group's operating leverage? $30,000 $330,000 f. Provide an interpretation of the calculated operating leverage and its implication in regard to business risk. g. Sketch…
do Manager accounting cash concept:- 1) X-ray film used in the radiology lab at your local hospital. 2) The commission for lab test technician was paid on the each patient 3) Lab test technicians are supervised by a supervisor who is paid $50,000 per year 4) Electrical costs are $2 per ultra sound machine-hour. 0.5 machine hours are required to do the full body check for a patient. 5) The straight-line amortization cost of the ultra sound machine used to do body check for patients totals $10,000 per year. 6) The salary of the president of Grace Care hospital is $100,000 per year. 7) Grace Care hospital spends $250,000 per year to advertise its products 8) Instead of treating patient, Grace Care hospital could have rented one of its lab room out at a rental income of $30,000 per year.
St. Johns Medical Center (SJMC) has five medical technicians who are responsible for conducting cardiac catheterization testing in SJMCs Cath Lab. Each technician is paid a salary of 36,000 and is capable of conducting 1,000 procedures per year. The cardiac catheterization equipment is one year old and was purchased for 250,000. It is expected to last five years. The equipments capacity is 25,000 procedures over its life. Depreciation is computed on a straight-line basis, with no salvage value expected. The reading of the catheterization results is conducted by an outside physician whose fee is 120 per test. The technicians report with the outside physicians note of results is sent to the referring physician. In addition to the salaries and equipment, SJMC spends 50,000 for supplies and other costs needed to operate the equipment (assuming 5,000 procedures are conducted). When SJMC purchased the equipment, it fully expected to perform 5,000 procedures per year. In fact, during its first year of operation, 5,000 procedures were run. However, a larger hospital has established a clinic in the city and will siphon off some of SJMCs business. During the coming years, SJMC expects to run only 4,200 cath procedures yearly. SJMC has been charging 850 for the procedureenough to cover the direct costs of the procedure plus an assignment of general overhead (e.g., depreciation on the hospital building, lighting and heating, and janitorial services). At the beginning of the second year, an HMO from a neighboring community approached SJMC and offered to send its clients to SJMC for cardiac catheterization provided that the charge per procedure would be 550. The HMO estimates that it can provide about 500 patients per year. The HMO has indicated that the arrangement is temporaryfor one year only. The HMO expects to have its own testing capabilities within one year. Required: 1. Classify the resources associated with the cardiac catheterization activity into one of the following: (1) committed resources, or (2) flexible resources. 2. Calculate the activity rate for the cardiac catheterization activity. Break the activity rate into fixed and variable components. Now, classify each activity resource as relevant or irrelevant with respect to the following alternatives: (1) accept the HMO offer, or (2) reject the HMO offer. Explain your reasoning. 3. Assume that SJMC will accept the HMO offer if it reduces the hospitals operating costs. Should the HMO offer be accepted? 4. Jerold Bosserman, SJMCs hospital controller, argued against accepting the HMOs offer. Instead, he argued that the hospital should be increasing the charge per procedure rather than accepting business that doesnt even cover full costs. He also was concerned about local physician reaction if word got out that the HMO was receiving procedures for 550. Discuss the merits of Jerolds position. Include in your discussion an assessment of the price increase that would be needed if the objective is to maintain total revenues from cardiac catheterizations experienced in the first year of operation. 5. Chandra Denton, SJMCs administrator, has been informed that one of the Cath Lab technicians is leaving for an opportunity at a larger hospital. She met with the other technicians, and they agreed to increase their hours to pick up the slack so that SJMC wont need to hire another technician. By working a couple hours extra every week, each remaining technician can perform 1,050 procedures per year. They agreed to do this for an increase in salary of 2,000 per year. How does this outcome affect the analysis of the HMO offer? 6. Assuming that SJMC wants to bring in the same revenues earned in the cardiac catheterization activitys first year less the reduction in resource spending attributable to using only four technicians, how much must SJMC charge for a procedure?
Problem 1c: Consider the following information for Rosebud Lane Hospital. The number of admissions for the year are expected to equal 1000, but could vary from 750 to 1250. Rosebud's fee-for-service is $2,000 under a prospective payment system. Under a capitation reimbursement system, Rosebud must cover 1000 patients at a capitation payment of $2,000. Rosebud's annual fixed costs are $500,000 and it variable cost per admission is $1,500. 1c. Calculate Rosebud's net profit under the Fee For Service Reimbursement method if admissions are 1250. (Answer to the nearest dollar. Do not include the dollar sign in your answer.) 1d. Calculate Rosebud's net profit under Capitation if admissions are 1250. (Answer to the nearest dollar. Do not include the dollar sign in your answer.)
A library shelving system has a first cost of $20,000 and a useful life of 10 years. The annual maintenance is expected to be $2,500. The annual benefits to the library staff are expected to be $9,000. If the effective annual interest rate is 10 percent, what is the benefit/cost ratio of the shelving system? Select one: a. 2.24 b. 1.73 с. 1.56 d. 1.51
If a trenching machine has an estimated life span of 7500 hours and a yearly operating cost of $7,000, what is the hourly cost if the machine is used for 250 hours during the year? Asume this machine is new. 1. $19 2. $28 3. $30 4. $7,000
5-64 Austin General Hospital is evaluating new lab equip- ment. The interest rate is 12% and in each case the equipment's useful life is 5 years. Use NPW analysis to pick which company you should purchase from. Company A B First cost $13,500 $20,000 $15,000 1,500 1,800 1,100 9,000 O&M costs Annual benefit 9,500 11,000 Salvage value 3,500 6,000 4,000
sing ACM, determine hourly rate to charge for this scenario: Machine cost $350,000 (w/tires) Regular maintenance $20,000 per yr Tires replaced once after 3 years; cost $4,000 present and in future Major repair in year 3 for $10,000 Salvage for $90,000 after 6 years 1,800 hrs/yr MARR = 6%
7/26/2021 Content The hospital where you are employed is continuing with their analysis with the goal of opening a walk- in clinic. After conducting additional research, the financial projections for the first year of operations are as follows: • Revenues (from 10,000 visits): $400,000 Wages and benefits: $220,000 • Rent: $5,000 Depreciation: $30,000 Utilities: $2,500 • Medical supplies: $50,000 Administrative supplies: $10,000 Assume that all costs are fixed except supply costs, which are variable. Assume that the clinic will be required to pay taxes at a 30% tax rate. Respond to the following questions. Be sure to show your work for all calculations. 1. Prepare the clinic's projected Profit and Loss (P&L) Statement. (8 points) 2. What number of visits is required to break even? (3 points) 3. What number of visits is required to provide you with an after-tax profit of $100,000? (4 points)
1) A manufacturing plant manager has purchased a new bologna slicing machine for $24,500. The new machine is expected to produce an extra $8,000 of revenue and have an annual operating expense of $3,000. If the useful life is expected at 6 years and i = 7% per year, what is the PW? Select one: a. $35000 b. $23835 c. $ 25000 d. $50000
You are considering starting a walk-in clinic. Your financial projections for the first year of operations are as follows: Revenue (10000 visits) $394,007 Wages and benefit $226,585 Rent $4,095 Depreciation $29,179 Utilities $2,164 Medical supplies $49,632 Administrative supplies $9,163 Assume that all costs are fixed, except supply costs, which are variable. Furthermore, assume that the clinic must pay taxes at a 31 percent rate. What number of visits is required to provide you with an after-tax profit of $108,247? [Hint: Remember that after-tax profit = before-tax profit * (1- tax rate).] (Do not round intermediate calculations. Round your final answer to 2 decimal places. For example, 12.3456 should be entered as 12.35. REMINDER: quantities are always rounded UP. Canvas does not have this capability.)