Show all work using Excel formulas (you must submit an Excel worksheet showing your work) FPPT Clinic offers Family Practice and Physical Therapy services at its location. The Family Practice Department generates $4,000,000 in revenue per year and the Physical Therapy Department generates $850,000 in revenue per year. The Family Practice Department occupies 80,000 square feet and the Physical Therapy Department occupies 40,000 square feet. Expenses for the departments are: Salaries/Wages & Benefits Other Expenses Family Practice $1,885,000 $1,226,000 Physical Therapy $400,000 $261,111 The Clinic is supported by three cost centers - Human Resources, Accounting, and Housekeeping services. Cost for those services are: Human Resources: $100,000 Accounting: $100,000 Housekeeping: $75,000 Allocate the costs for each of the three cost centers to the Family Practice Department and Physical Therapy Department. For each cost center, select a driver that you think is fair and allocate the cost pool for that cost center. Complete a P&L for the Family Practice Department and for the Physical Therapy Department.

Show all work using Excel formulas (you must submit an Excel worksheet showing your work) FPPT Clinic offers Family Practice and Physical Therapy services at its location. The Family Practice Department generates $4,000,000 in revenue per year and the Physical Therapy Department generates $850,000 in revenue per year. The Family Practice Department occupies 80,000 square feet and the Physical Therapy Department occupies 40,000 square feet. Expenses for the departments are: Salaries/Wages & Benefits Other Expenses Family Practice $1,885,000 $1,226,000 Physical Therapy $400,000 $261,111 The Clinic is supported by three cost centers - Human Resources, Accounting, and Housekeeping services. Cost for those services are: Human Resources: $100,000 Accounting: $100,000 Housekeeping: $75,000 Allocate the costs for each of the three cost centers to the Family Practice Department and Physical Therapy Department. For each cost center, select a driver that you think is fair and allocate the cost pool for that cost center. Complete a P&L for the Family Practice Department and for the Physical Therapy Department.

Name: Show all work using Excel formulas (you must submit an Excel workshee
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Description: Show all work using Excel formulas (you must submit an Excel worksheetshowing your work)FPPT Clinic offers Family Practice and Physical Therapy services at its location. TheFamily Practice Department generates $4,000,000 in revenue per year and the

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter17: Activity Resource Usage Model And Tactical Decision Making

Section: Chapter Questions

Problem 6E: Elliott, Inc., has four salaried clerks to process purchase orders. Each clerk is paid a salary of...

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The orthopods & the radiologistSuppose that there are ten orthopaedic surgeons that have their private consultation rooms in a shared facility. Currently each earns $20,000 per month and pays $10,000 per month towards the operating expenses of the joint facility.A world renowned radiologist has just moved to town and is deliberating over where to set-up his practice. If he goes it alone he will earn $300,000 per month and will have to incur a monthly operating cost of $100,000. On the other hand, the orthopods have calculated that if they were to accommodate him in their existing facility, their total operating costs would increase from $100,000 to $120,000 per month, but each individual practice will increase its revenues from $20,000 to $50,000 per month. Moreover, they have convinced the radiologist, that his practice will also increase revenues from patients by $20,000 per month.Assuming that the 10 orthopods have chosen a representative to negotiate with the radiologist (so…
Elliott, Inc., has four salaried clerks to process purchase orders. Each clerk is paid a salary of 25,750 and is capable of processing as many as 6,500 purchase orders per year. Each clerk uses a PC and laser printer in processing orders. Time available on each PC system is sufficient to process 6,500 orders per year. The cost of each PC system is 1,100 per year. In addition to the salaries, Elliott spends 27,560 for forms, postage, and other supplies (assuming 26,000 purchase orders are processed). During the year, 25,350 orders were processed. Required: 1. Classify the resources associated with purchasing as (1) flexible or (2) committed. 2. Compute the total activity availability, and break this into activity usage and unused activity. 3. Calculate the total cost of resources supplied (activity cost), and break this into the cost of activity used and the cost of unused activity. 4. (a) Suppose that a large special order will cause an additional 500 purchase orders. What purchasing costs are relevant? By how much will purchasing costs increase if the order is accepted? (b) Suppose that the special order causes 700 additional purchase orders. How will your answer to (a) change?
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?
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