Healthcare Financial Management and Economics Week 6 Assignment2—Oceans Imaging Center Assignment2: Break-Even Point Formulas Before making hiring or purchasing decisions, healthcare organizations must consider whether the decision is financially profi

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Healthcare Financial Management and Economics

 

Week 6 Assignment2—Oceans Imaging Center

 

Assignment2: Break-Even Point Formulas

 

Before making hiring or purchasing decisions, healthcare organizations must consider whether the decision is financially profitable. By calculating break-even points, organizations are able to examine actual costs and make more sound financial decisions. For this Assignment, you use data from the Oceans Imaging Center and calculate break-even points.

 

 

Scenario: Oceans Imaging Center is a small imaging center with two analogue film or screen units. As the director of the center, Juanita Hernandez has been asked to determine if it is financially profitable to addan additional technologistaide to their current staff of two technologists.She has analyzed the current costs and determined the following:

 

Reimbursement per screen

$130

Equipment lease per month ($11,000 per machine)

$22,000

Technologists costs per mammography

$34

Technologists aide per mammography

$21

Variable cost per mammography

$12

Equipment maintenance per month per machine

$10,000

Indirect Costs

$0

 

To prepare for the Assignment:

 

Examine the Oceans Imaging Center scenario. Reflect on how you will use the provided financial data to calculate break-even points. Refer to Chapter 9 of Financial Management of Health Care Organizations: An Introduction to Fundamental Tools, Concepts and Applicationsfor additional guidance.

 

The Assignment:

 

Given the above information, use the “Week 6 Assignment 2 Break Even Excel Template” to answer these items:

 

A.   Solve for monthly volume to break even.

B.   Solve for monthly volume needed to break even at desired $3,000 per month profit level.

C.   Solve for volume needed to break even at new reimbursement of $110per screen and no profit.

D.   Solve for volume needed to break even with an additional technologist aide, using part A’s data for the conditions.

 

Break-Even Point             
     Part a.Part b.Part c.Part d.   
 Givens:  Dollars No.Dollars No.DollarsNo.DollarsNo.   
 AReimbursement per mammography            
 BEquipment cost per month per machine           
 CIntentionally left blank             
 DTechnologist cost per mammography            
 ETechnologist aide cost per mammography           
 FVariable cost per mammography            
 G Monthly maintanence per machine            
 H Indirect costs             
 IDesired profit             
                
 a. Solve for monthly volume to break even:           
       Variable   Total Indirect Desired
   Price Volume Cost per Unit Volume Fixed Cost Costs Profit
   (A) ? (D + E + F) ? (B + G) (H) (I)
  Setup: xVolume =$0.00xVolume +$0 + $0+$0
                
  Solution: xVolume =$0.00xVolume+$0 $0+$0
   #VALUE!xVolume =    $0    
     Volume =#VALUE!        
                
 b. Solve for monthly volume needed to break even at desired profit level:        
       Variable   Total Indirect Desired
   Price Volume Cost per Unit Volume Fixed Cost Costs Profit
   (A) ? (D + E + F) ? (B + G) (H) (I)
  Setup:$0.00xVolume =$0.00xVolume +$0 +$0+$0
                
  Solution:$0.00xVolume =$0.00xVolume+$0 $0+$0
   $0.00xVolume =    $0    
     Volume =#DIV/0!        
                
 c. Solve for volume needed to break even at new charge and no profit:        
       Variable   Total Indirect Desired
   Price Volume Cost per Unit Volume Fixed Cost Costs Profit
   (A) ? (D + E + F) ? (B + G) (H) (I)
  Setup:$0.00xVolume =$0.00xVolume +$0 + $0+$0
                
  Solution:$0.00xVolume =$0.00xVolume+$0 $0+$0
   $0.00xVolume =    $0    
     Volume =#DIV/0!        
                
 d. Solve for volume needed to break even with additional labor cost        
       Variable   Total Indirect Desired
   Price Volume Cost per Unit Volume Fixed Cost Costs Profit
   (A) ? (D + E + F) ? (B + G) (H) (I)
  Setup:$0.00xVolume =$0.00xVolume +$0 +$0+$0
                
  Solution:$0.00xVolume =$0.00xVolume+$0+$0+$0
   $0.00xVolume =    $0    
     Volume =#DIV/0!        
  Note: Since the Technologist Aide is presented as a variable cost, the only difference in the setup of this problem and Part A 
              is raising the variable cost by the amount of the Technologist Aide per mammography.     

 

  • 7 years ago
Healthcare Financial Management and Economics Week 6 Assignment2—Oceans Imaging Center Assignment2: Break-Even Point Formulas Before making hiring or purchasing decisions, healthcare organizations must consider whether the decision is financially profi
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