Health Care Finance

complete the following assignment, MUST HAVE THE FORMULAS IN THE EXCEL BOXES. There are 3 different tabs 2.1, 2.2 and 2.3 DUE TODAY 2/7/2021 by 7 pm Central Standard time. Below is tab 2.1

 CHAPTER 5 HOMEWORK – COSTING AND PROFIT ANALYSISHomework 2.1, Chapter 5Using the data below, answering the following questions:Fixed costs$23,750,000 Variable cost/day$525 Charge (rev)/day$2,575 Inpatient days14,500 

a. Construct the hospital’s base case projected P&L statementb.

 What is the hospital’s breakeven point (volume / patient days needed to breakeven)?

c. What is the economic breakeven (volume required ) to provide a profit of $1,500,000?

d. What is the total contribution margin if volume decreases by 20%?

e. Based on the scenario in d., if fixed costs remain the same, what is the hospital’s profit or loss?

2.1

days

statement

	CHAPTER 5 HOMEWORK – COSTING AND PROFIT ANALYSIS
Homework 2.1, Chapter 5
Using the data below, answering the following questions:
Fixed costs	$23,750,000
Variable cost/day	$525
Charge (rev)/day	$2,575
			Inpatient	14,500
a. Construct the hospital’s base case projected	P&L
b. What is the hospital’s breakeven point (volume / patient days needed to breakeven)?
c. What is the economic breakeven (volume required ) to provide a profit of $1,500,000?
d. What is the total contribution margin if volume decreases by 20%?
e. Based on the scenario in d., if fixed costs remain the same, what is the hospital’s profit or loss?

2.2

CHAPTER 5 HOMEWORK – COSTING AND PROFIT ANALYSIS

and variable costs are based on the projected number of visits. Medical and administrative supplies are variable costs; all other costs are fixed costs.
Medical and administrative supplies are variable costs; all other costs are fixed costs.

Homework 2.2, Chapter 5
You are considering starting a walk-in clinic. Your financial projections for the first year of operations are below.	Revenue
Projected Visits	12,000
	Revenues	$650,000
Wages & benefits	300,000
Rent	6,500
Depreciation	40,000
Utilities	4,200
Medical supplies	55,000
Administrative supplies	10,000
a. Construct the clinic’s projected P&L statement
b. What is the total contribution margin?
c. What is the contribution margin rate (rounded to the nearest dollar)?
d. What is the clinic’s breakeven point?
e. What is the economic breakeven for a profit of $100,000?

2.3

,

) with the following revenue and cost projections. In order to better determine the departments’ overall true cost and profit margin, management wants to allocate service department costs as overhead allocations to these departments.

Revenues

revenues

Inpatient Services

Outpatient Services

Clinic Services

Costs

4,500,000

Department

Financial Services

Facilities

Housekeeping

Administration

Cost Driver Inpatient Outpatient Clinic

85,000

25,000

Department

Cost Driver Total Utilization

Financial Services
Facilities
Housekeeping
Administration

Inpatient Outpatient Clinic Total

Financial Services
Facilities
Housekeeping
P&L Inpatient Outpatient Clinic Total
Revenue

Direct Costs

Indirect Costs
Total Costs

CHAPTER 6 HOMEWORK – DEPARTMENTAL COSTING AND COST ALLOCATION
Homework 2.3, Chapter 6
St. Benedict Hospital has three primary revenue producing departments (Inpatient,			Outpatient			Clinic
PROJECTED REVENUES AND COSTS PER DEPARTMENT
	Inpatient Services	$ 19,250,000
	Outpatient Services	28,500,000
	Clinic Services	11,500,000
		Total	$ 59,250,000
	Direct Costs
$ 11,250,000
14,250,000
	4,500,000
Total costs	$ 30,000,000
Service		Department
			Financial Services	$ 5,000,000
			Facilities	9,500,000
			Housekeeping	3,000,000
		Administration
Total overhead costs	$ 22,000,000
	Total Costs	$ 52,000,000
Projected Profit	$ 7,250,000
Management considered various cost drivers and made the determiniation to use the following as the most relevant for each service department:
		Cost Driver
Patient revenue
Square feet
Housekeeping hrs
Salary dollars
Utlization information for allocations:
	Total Utilization
Square Feet	2	85,000	2	25,000	75,000	585,000
Housekeeping Hours	60,000	170,000
Salary Dollars	$6,500,000	$9,000,000	$2,500,000	$18,000,000
Based upon this information, complete the following, filling in each highlighted cell. Be sure to use formulas to show your work.
Use Exhibit 6.6 as a guideto complete this table and calculate the allocation rates for each service department cost.
Cost Pool Amount	Allocation Rate
Use Exhibit 6.7 as a guide to complete the indirect cost allocations to each patient service area.
Indirect Cost Allocations
General Administration
Total	Indirect Costs
Using Exhibit 6.8 as a guide, complete the P&L projections below for each patient service area.
Profit using only Direct Costs
Profit margin % using Direct Costs only
Profit using Total Costs
Profit margin % using Total Costs