<p>Accounting Services, Inc. has offered to do all the billings and collections

Question

<p>Accounting Services, Inc. has offered to do all the billings and collections of Dr. Anderson, a general practitioner. the annual fee will be $10,000. The service will replace the part-time book-keeper who works for $10 an hour, 10 hours a week. Because these activities will take place away from the office, Dr. Anderson estimates that he will have one additional hour a week to see patients. Normally, he sees three patients an hour with an average visit fee of $50. The office is open 50 weeks a year. Since the computer service will maintain all records in its office, the doctor will no longer need to rent storage space for the office files. The storage space rents for $200 a month.</p>
<p>Required: Determine whether or not Dr. Anderson should accept the offer to use the computer service.</p>

Explanation / Answer

Thse services should be accepted as this will save the cost. Present Cost Part time Accountant (50 x 10 x 10) = $5,000 Rent of space ( 200 x 12) = $2,500 Additional Patient revenue (50 x 3 x 50) = $7,500 Total Savings = $15,000 Cost of service = $10,000 Net savings = $5,000

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