City Home Care hires a furnished office at $2,000 per month, telephones at $200
ID: 1188841 • Letter: C
Question
City Home Care hires a furnished office at $2,000 per month, telephones at $200 a month, and a secretary at $2,000 per month. These resources do not change, no matter how many clients are visited. Currently, CHC sees 400 patients a month, each three times (1,200 visits in total). CHC uses 30 full-time nurses with their own cars, and they are paid $4,000 per month each. There is a plentiful supply of additional nurses in town. These nurses can be hired almost on notice. Supplies are $20 per patient per month. What are the money costs of operating CHC at its current level? Approximately how much would it cost to operate CHC at a level of 1,300 visits per month?
My question is the increase to 1,300 visits per month. How did the number of full time nurses increase to 32.5. For example The text shows 32.5 x $4,000 = $130,000. And supplies are now 20 x $433 = $8,660. Please explain. Thank you.
Explanation / Answer
The costs of current level (1,200 visits) are given below:
Heads
Amount per month
Office rent
$2,000
Telephone charges
$200
Secretary salary
$2,000
Nurse salary (30 ×$4,000)
$120,000
Supplies (400 ×$20)
$8,000
Total cost
$132,200
The costs of current level (1,300 visits) are given below:
Heads
Amount per month
Office rent
$2,000
Telephone charges
$200
Secretary salary
$2,000
Nurse salary (32.5 ×$4,000)
$130,000
Supplies (433 ×$20)
$8,,660
Total cost
$142,860
Workings: Number of nurses should be increased, since the number of visit increases. It should be {(30 / 1,200) × 1,300 =} 32.5.
Supplies should also be increased proportionately {(400 / 1,200) × 1,300 =} 433
Heads
Amount per month
Office rent
$2,000
Telephone charges
$200
Secretary salary
$2,000
Nurse salary (30 ×$4,000)
$120,000
Supplies (400 ×$20)
$8,000
Total cost
$132,200
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