Assignment: Net Revenue and Budgeting
Assignment: Net Revenue and Budgeting
Continue to work on the Week 5 Application Assignment that you started working on in Week 4.
This Assignment will be due. Be sure and include all of your calculations.
I have attached my first part as well as the template for this week.
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| Name: | Assignment: | |||
| Fixed/Variable Cost Scenario | ||||
| You have performed a cost analysis of your health service organization and have determined the following: based on the latest three years of information, your annual cost of operations is $1,600,000 with annual volume of 10,000 procedures. You have determined that certain of your supply items are fixed in nature (those marked with an F) while others are variable (marked with a V). | ||||
| Supply Items | F/V | Average Annual Amount | ||
| Supply item 1 | F | $220,000 | ||
| Supply item 2 | F | 180,000 | ||
| Supply item 3 | F | 75,000 | ||
| Supply item 4 | F | 50,000 | ||
| Supply item 5 | F | 25,000 | ||
| Supply item 6 | F | 50,000 | ||
| Supply item 7 | V | 500,000 | ||
| Supply item 8 | V | 300,000 | ||
| Supply item 9 | V | 200,000 | ||
| Annual Cost of Operations | 1,600,000 | |||
| Question: An insurance company that is considering directing its 1,000 units per year of procedure business to your organization has approached you. Your board has mandated that you make $5 of profit from each of the procedures. You obviously want the highest possible price, but as you enter the negotiations, what is the lowest possible price you would be willing to accept from this payer?
Hint: Calculate the variable cost. |
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| Fixed/Variable Cost Scenario | Variable | Fixed | Total | |
| Supply item 1 | ||||
| Supply item 2 | ||||
| Supply item 3 | ||||
| Supply item 4 | ||||
| Supply item 5 | ||||
| Supply item 6 | ||||
| Supply item 7 | ||||
| Supply item 8 | ||||
| Supply item 9 | ||||
| Total Cost | ||||
| Annual Volume | ||||
| Variable Cost per Unit | ||||
| Profit Target | ||||
| Total (lowest possible price) | ||||
| Name: Megan Coggins Course: NURS 6211 | ||
| Current Ratio = total current assets/ total current liabilities | 2.27 | Note: in B cell calculation is included |
| Days of Cash on Hand = cash/(total operating expense/365) | 88.79 | |
| Age of Accounts Receivable = accounts receivable, less allowance for doubtful accounts/(net patient service revenue/365) | 149.71 | |
| Age of Physical Plant = accumulated depreciation/depreciation | -31.42 | 31.42 |
| Debt to Equity Ratio = Long Term Debt/Balance at June 30, 20×2-Total net assets | 0.49 | |
| Debt to Assets Ratio = Long TermDebt/total assets | 0.22 | |
| Collection Rate = net patient service revenue/gross patient service revenue | 0.86 | |
| Operating Margin Ratio = gains or loss from operations/net patient service revenue | 0.10 | |
| ABC General Hospital Statement of Revenue and Expenses – June 30, 20X2 | ||
| Assets | ||
| Current Assets | ||
| Cash | $1,985,000 | |
| Accounts Receivable less allowance for doubtful accounts | 3,720,000 | |
| Inventory | 550,000 | |
| Total Current Assets | $6,255,000 | |
| Fixed Assets | ||
| Plant and Equipment | $10,000,000 | |
| Less Accumulated Depreciation | -3,770,000 | |
| Total Fixed Assets | $6,230,000 | |
| Total Assets | $12,485,000 | |
| Liabilities and Net Assets | ||
| Current Liabilities | ||
| Accounts Payable | $1,900,000 | |
| Accrued Accounts Payable | 850,000 | |
| Total Current Liabilities | $2,750,000 | |
| Long Term Debt | 2,800,000 | |
| Pension Liability | 1,250,000 | |
| Total Liabilities | 6,800,000 | |
| Net Assets | 5,685,000 | |
| Balance at June 30, 20X1 | 4,775,000 | |
| Gain or (Loss) from Operations | 910,000 | |
| Balance at June 30, 20X2 – Net Assets | $5,685,000 | |
| Total Liabilities and Net Assets | $12,485,000 | |
| Gross Patient Service Revenue | ||
| Inpatient Revenue | $8,250,000 | |
| Outpatient Revenue | 2,275,000 | |
| Total Gross Patient Service Revenue | $10,525,000 | |
| Less: Discounts | -1,455,250 | |
| Net Patient Revenue | $9,069,750 | |
| Operating Expenses | ||
| Salaries & Benefits | $5,110,000 | |
| Supplies and Services | 2,829,750 | |
| Interest | 100,000 | |
| Depreciation | 120,000 | |
| Total Operating Expense | $8,159,750 | |
| Gain or (Loss) from Operations | $910,000 | |