1. The Housekeeping Department of Micanopy Hospital has direct costs of $500,000
ID: 2626328 • Letter: 1
Question
1. The Housekeeping Department of Micanopy Hospital has direct costs of $500,000. The hospital's four patient service departments utilize the following amounts of space: Department A 1,000 square feet; Department B 2,000; Department C 3,000; Department D 4,000. Assuming that the cost driver for housekeeping costs is the amount of occupied space, what is the allocation of housekeeping costs to Department A?
a) $ 75,000 b)$ 150,000 c)$ 100,000 d)$ 50,000 e)$ 25,000
2. You work in a clinic with fixed costs of $300,000 and a variable cost per visit of $15. You are projecting 6,000 visits this year. What are your expected total costs?
a)$390,000 b)$90,000 c)$210,000 d)$4,500,000
3. Assume the following cost and revenue data for General Hospital:
Fixed costs = $15,000,000.
Variable cost per inpatient day = $250.
Revenue per inpatient day = $1,000.
What is the expected profit at a volume of 25,000 inpatient days?
4. Assume the following cost and revenue data for General Hospital:
Fixed costs = $15,000,000.
Variable cost per inpatient day = $250.
What revenue per inpatient day is required to obtain a profit of $1,000,000 at a volume of 25,000 patient days?
5.Consider the following data:
Fixed costs = $10,000,000.
Variable cost per inpatient day = $400.
What revenue per inpatient day is required to obtain a profit of $1,000,000 at a volume of 10,000 patient days?
a)$390,000 b)$90,000 c)$210,000 d)$4,500,000
3. Assume the following cost and revenue data for General Hospital:
Fixed costs = $15,000,000.
Variable cost per inpatient day = $250.
Revenue per inpatient day = $1,000.
What is the expected profit at a volume of 25,000 inpatient days?
4. Assume the following cost and revenue data for General Hospital:
Fixed costs = $15,000,000.
Variable cost per inpatient day = $250.
What revenue per inpatient day is required to obtain a profit of $1,000,000 at a volume of 25,000 patient days?
5.Consider the following data:
Fixed costs = $10,000,000.
Variable cost per inpatient day = $400.
What revenue per inpatient day is required to obtain a profit of $1,000,000 at a volume of 10,000 patient days?
Explanation / Answer
Part 1:
Fractional amount of space used by Department A:
1,000/(1,000+2,000+3,000+4,000)=1/10
Therefore Department A will get 1/10 of the total money. We can write:
1/10(500,000)= $50,000
Option E: $50,000
Part 2:
Expected Total cost = Fixed cost + No. of patients x Variable cost
300,000 + 15 x6000 = $390,000
Option A: $390,000
Part 3:
Revenue for 25,000 patients = 1,000 x 25,000 = $25,000,000
Total cost = Fixed cost + No. of patients x Variable cost
= 15,000,000 + 25,000x250 = $21,250,000
Profit = Revenue - Total cost = $25,000,000 - $21,250,000 = $3,750,000
Part 4
Total cost to the hospital = Fixed cost + No. of patients x Variable cost
= 15,000,000 + 25,000x250 = $21,250,000
Profit = Revenue - Total cost
Revenue = $1,000,000 + $21,250,000 = $22,250,000
Revenue per inpatient = $22,250,000/25,000 = $890
Part 5.
Total cost to the hospital = Fixed cost + No. of patients x Variable cost
= 10,000,000 + 10,000x400 = $14,000,000
Profit = Revenue - Total cost
Revenue = $1,000,000 + $14,000,000 = $15,000,000
Revenue per inpatient = $15,000,000/10,000 = $1500
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