Question;Assignment;Exercise 17-1: Variance Analysis;Greenview Hospital operated at 120% of normal capacity in two of its;departments during the year. It operated 120% times 20,000 normal capacity;direct labor nursing hours in routine services and it operated 120% times;20,000 normal capacity equipment hours in the laboratory. The lab allocates;overhead by measuring minutes and hours the equipment is used, thus equipment;hours.;Assumptions: For Routine Services Nursing: ?;20,000 hours X 120% = 24,000 direct labor nursing hours. ? Budgeted Overhead at;24,000 hours = $42,000 fixed plus $6,000 variable = $48,000 total. ? Actual;Overhead at 24,000hours = $42,000fixed plus $7,000variable = $49,000 total. ?;Applied Overhead for 24,000 hours at $2.35 = $56,400. For Laboratory: ? 20,000;hours X 120% = 24,000 equipment hours. ? Budgeted Overhead at 24,000 hours =;$59,600 fixed plus $11,400variable = $71,000 total. ? Actual Overhead at 24,000;hours = $59,600 fixed plus $11,600 variable = $71,200 total. ? Applied Overhead;for 24,000 hours at $3.455 = $82,920. Required;1. Set up a worksheet for applied;overhead costs and volume variance with a column for Routine Services Nursing;and a second column for Laboratory.;2. Set up a worksheet for actual overhead;costs and budget variance with a column for Routine Services Nursing and a;second column for Laboratory.;3. Set up a worksheet for volume variance and;budget variance totaling net variance with a column for Routine Services;Nursing and a second column for Laboratory.;4. Insert input data from Assumptions.;5. Complete computations for all three;worksheets.;Assignment Exercise 17-2;Three-Level Revenue Forecast Three;eye-ear-nose-and-throat physicians decide to hire an experienced audiologist in;order to add a new service line to their practice.;*They ask the practice manager to;prepare a three-level volume forecast as a first step in their decision-making.;Assumptions: for the base level (most;likely) revenue forecast, assume $200 per procedure times four procedures per;day times five days equals 20 procedures per week times 50 weeks per year equals;1,000 potential procedures per year. For the best case revenue forecast, assume;an increase in volume of one procedure per day average, for an annual increase;of 250 procedures (5 days per week times 50 weeks equals 250). (The best case;is if the practice gains a particular managed care contract.) For the worst;case revenue forecast, assume a decrease in volume of two procedures per day;average, for an annual decrease of 500 procedures. (The worst case is if the;practice loses a major payer.);?;Audiologists were designated as;eligible for physician and other prescriber incentives" as discussed;in Chapter 20. Thus the new service line was a logical move. Required Using the;above assumptions, prepare a three-level forecast similar to the example in;Fig- ure 17-5 and document your calculations. Assignment;Exercise 17-3;Target Operating Income Acme Medical Supply Company;desires a target operating income amount of $100,000, with assumption inputs as;follows: ? Desired (target) operating income amount = $100,000 ? Unit price for;sales = $80 ? Variable cost per unit = $60 ? Total fixed cost = $60,000 Compute;the required revenue to achieve the target operating income and compute a;contribution income statement to prove the totals. Assignment;Exercise 18-1: Estimate of Loss You are the;practice manager for a four-physician office. You arrive on Monday morning to;find the entire office suite flooded from overhead sprinklers that;malfunctioned over the weekend. Water stands ankle-deep everywhere. The;computers are fried and the contents of all the filing cabinets are soaked.;Your own office, where most of the records were stored, has the worst damage.;The practice carries valuable papers insurance coverage for an amount up to;$250,000. It is your responsibility to prepare an estimate of the financial;loss so that a claim can be filed with the insurance company. How would you go;about it? What would your summary of the losses look like?;Exercise 18-2: Estimate of Replacement Cost The;landlord carries contents insurance that should cover the damage to the;furnishings, equipment, and to the computers, and the insurance company;adjuster will come tomorrow to assess the furnishings and equipment damage.;However, your boss is sure that the insurance settlement will not cover;replacement costs. Consequently, you have been instructed to prepare an;estimate of what has been lost and/ or damaged plus an estimate of what the;replacement cost might be. How would you go about it? What would your summary;of these losses look like?;Exercise 18-3: Benchmarking Review the chapter text;about benchmarking.;Required 1. Select either the MHS case study in;Chapter 25 or one of the organizations represented by a mini-case study in;Chapters 27, 28, or 29.;2. Prepare a list of measures that could be;benchmarked for this organization. Comment on why these items are important for;benchmarking purposes.;3. Find another example of benchmarking for a;healthcare organization. The example can be an organization report or it can be;taken from a published source such as a journal article.
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