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HS440 Unit 7 assignment 2




Question;Question 1, 2, 3 4 and 8 only answeredUnit;7;Assignment;Answer Key;Numeric;Problems (8 @ 6.25 = 50);Use the;following information for problems 1, 2;and 3.;David Jones, the new;administrator for a surgical clinic, was trying to determine how to allocate;his indirect expenses. His staff was complaining that the current method of;taking a percentage of revenues was unfair. He decided to try to allocate;utilities based on square footage of each department, administration based on;direct costs, and laboratory based on tests. Use the information in the chart;below to answer problems 1, 2, 3;Square;Footage;Direct;Expenses;Lab Tests;Utilities;$200,000;Administration;2,000;500,000;Laboratory;2,000;625,000;Day-op Suite;3,000;1,400,000;4,000;Cystoscopy;1,500;300,000;500;Endoscopy;1,500;600,000;500;Total;10,000;$3,375,000;5,000;1.;What are the Day Op Suite?s total expenses?;2.;What are the Cystoscopy Department?s total;expenses?;3.;What are the Endoscopy Department?s total;expenses?;Use;the following information for questions 4, 5, and 6.;Your;hospital has been approached by a major HMO to perform all their MS-DRG 470;cases (major joint procedures). They have offered a flat price of $10,000 per;case. You have reviewed your charges for MS-DRG 470 during the last year and;found the following profile;Average Charge $15,000;Average LOS 5 Days;Cost/ChargeVariable Cost %;Routine Charge $3,600 0.80 60;Operating Room 2,657 0.80 80;Anesthesiology 293 0.80 80;Lab 1,035 0.70 30;Radiology 345 0.75 50;Medical Supplies 4,524 0.50 90;Pharmacy 1,230 0.50 90;Other Ancillary 1,316 0.80 60;Total;Ancillary $11,400 0.75 50;4.;In the above data set, assume that the;hospital?s cost to charge ratio is 0.80 for routine services and 0.75 for all;other ancillary services. Using this information, what would the average cost;of MS-DRG 470 be?;5. Estimate;the variable cost per MS-DRG 470 using the departmental cost/charge ratios and;variable cost percentages.;6.;The HMO in the above example has indicated;that their doctors use less expensive joint implants. If this less expensive;implant is used, your medical supply charges would be reduced by $2,000. What;is the estimated reduction in variable cost?;7.;Calculate;the number of units needed to break even given the following information;Revenue;per Visit;$55;Variable;Cost per Visit;$30;Contribution;Margin per Visit;$25;Fixed;Cost;$154,000;8.;Calculate the breakeven price from the;following information.;Quantity;of services = 3,000;Fixed;costs = $45,000;Average;cost per unit = $150.00;Required;profit = $30,000


Paper#58425 | Written in 18-Jul-2015

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