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Tyger

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Chapter 5
5.1 Fixed costs are not related to the volume of services delivered. Semi-fixed costs are fixed at two or values within relevant ranges.
5.2 Total fixed costs and total variable costs.
5.3 a) The cost-volume profit analysis is applied to organization’s costs and revenue structure that analyzes the effect of volume changes on cost and profits.b) It’s useful because they evaluate causes of action regarding pricing and introduction of new services.
5.4 a) The differences between per-unit cost (variable cost rate) and hence the amount that each unit of outpit contributes to cover fixed costs and ultimately flows to profit.b) They contribute to cover fixed costs and ultimately flows to profit.
5.5a)Total Revenue-Total Variable Costs-Fixed Costs=Profit. b) The volume breakdown partially has the volume cost rate of the contribution margin.
5.6a) If high proportion of a business total costs are fixed. b) It’s measured by the degree of operating level.
5.7 When a provider moves from a fee-for-service to a discounted fee-for-service environment the element of capitated environment dramatically differs.
5.8 A capitated environment vs. a fee-for-service environment have critical differences in profit analysis. Mainly a capitated provider takes on the insurance function.
5.9 By the number of lives being treated rather than the number of treatments being given to one life. Instead of trying to see more patients to increase revenue a capitated environment would push the provider to see less patients to reduce costs. The push would be for preventative care.
5.10 a) The cost structure that is best when a provider is primarily capitated is fixed. This assumes a fixed number of lives covered. The revenue stream is fixed regardless of the volume of services provided. Financial risk is minimized by having a cost structure that matches its revenue structure. b) The

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