Assignment
SchoolRocks123
Week1-VS.docxPart 1
Case Study: Parkview Hospital
Parkview Hospital, a regional hospital, serves a population of 400,000 people. The next closest hospital is 50 miles away. Parkview’s accounting system is adequate for patient billing. The system reports revenues generated per department but does not break down revenues by unit within departments. For example, Parkview knows patient revenue for the entire psychiatric department but does not know revenues in the child and adolescent unit, the chemical dependence unit, or the neuropsychiatric unit.
Parkview receives its revenues from three principal sources: the federal government (Medicare), the state government (Medicaid), and private insurance companies (Blue Cross–Blue Shield). Until recently, the private insurance companies continued to pay Parkview’s increasing costs and passed these on to the firms through higher premiums for their employees’ health insurance.
Last year Trans Insurance (TI) entered the market and began offering lower-cost health insurance to local firms. TI cut benefits offered and told Parkview that it would pay only a fixed dollar amount per patient. A typical firm could cut its health insurance premium 20 percent by switching to TI. TI was successful at taking 45 percent of the Blue Cross–Blue Shield customers. Firms that switched to TI faced stiff competition and sought to cut their health care costs.
Parkview management estimated that its revenues would fall 6 percent, or $3.2 million, next year because of TI’s lower reimbursements. Struggling with how to cope with lower revenues, Parkview began the complex process of deciding what programs to cut, how to shift the delivery of services from inpatient to outpatient clinics, and what programs to open to offset the revenue loss (e.g., open an outpatient depression clinic). Management can forecast some of the costs of the proposed changes, but many of its costs and revenues (such as the cost of the admissions office) have never been tracked to the individual clinical unit.
Required:
1. Was Parkview’s accounting system adequate 10 years ago?
2. Is Parkview’s accounting system adequate today?
3. What changes should Parkview make in its accounting system?
(Minimum 450 words). You are required to have at least 3 references from a creditable source. Make sure your discussion is in APA format. Your references need to be in APA format.
Part 2
Case Study
Golf Specialties (GS), a Belgian company, manufactures a variety of golf paraphernalia, such as head covers for woods, embroidered golf towels, and umbrellas. GS sells all its products exclusively in Europe through independent distributors. Given the popularity of Tiger Woods, one of GS’s more popular items is a head cover in the shape of a tiger.
GS is currently making 500 tiger head covers a week at a per unit cost of 3.50 euros, which includes both variable costs and allocated fixed costs. GS sells the tiger head covers to distributors for 4.25 euros. A distributor in Japan, Kojo Imports, wants to purchase 100 tiger head covers per week from GS and sell them in Japan. Kojo offers to pay GS 2 euros per head cover. GS has enough capacity to produce the additional 100 tiger head covers and estimates that if it accepts Kojo’s offer, the per unit cost of all 600 tiger head covers will be 3.10 euros. Assume the cost data provided (3.50 euros and 3.10 euros) are accurate estimates of GS’s costs of producing the tiger head covers. Further assume that GS’s variable cost per head cover does not vary with the number of head covers manufactured.
Required:
1. Given the data in the problem, what is GS’s weekly fixed cost of producing the tiger head covers?
2. To maximize firm value, should GS accept Kojo’s offer? Explain why or why not.
3. Besides the data provided above, what other factors should GS consider before making a decision to accept Kojo’s offer?
Complete the assignment and answer the questions in APA format. Your assignment should be in paragraph form and formatted as a paper.
Part 3
