...“Ruger Clinic” Healthcare Finance – HSA525: An Introduction to Accounting and Financial Management May 1, 2011 Instructor Feedback Grade: 320 out of 320; Comments: Hi, Excellent job on the Ruger Clinic assignment. Abstract This paper discusses the following topics: value of the cost pool; The Housekeeping Service department of Ruger Clinic scenario; cost-volume-profit (CVP) analysis; capitation rates: fee-for-service approach; cost approach, and demographic approach, and conventional versus zero-based budgeting. Key words: cost pool value, cost-volume-profit (CVP) analysis; capitation rates: fee-for-service; cost, and demographic approaches, and conventional versus zero-based budgeting. Ruger Clinic 1. What is the value of the cost pool? A cost pool is “a grouping of costs that must be allocated” (Gapenski, pg 165) but “it may be beneficial to separate the costs of that support department into multiple pools” (Gapenski, pg 166) if services of the support department differ substantially. For our scenario the value of the cost pool is $100,000 in direct total costs of the Housekeeping Services department. 2. What is the allocation rate if: a) Patient services revenue is used as the cost driver? The formula for the allocation rate when patient services is used as the cost driver looks like this: Patient Services Revenue: $100,000 (direct costs) / $ 5,000,000 (patient revenue) = $0.02 per revenue dollar (allocation...
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...ASSIGNMENT 2: HSA 525 Ruger Clinic Raymond Barber Dr. Japheth Kaluyu 1 What is the value of the cost pool? The Housekeeping department of Ruger Clinic consisted of $100,000 in total budgeted costs for the year of 2007. The cost pool is basically direct costs of one support department. In the case of Ruger Clinic, the cost pool's value is $100 K. 2aWhat is the allocation rate if patient services revenue is used as the cost driver? The cost pool, which must be found first, is the total cost of the Housekeeping department which is $100,000, while the patient services revenue was 5,000.00. The Allocation Rate equals the cost pool divided by the patient services revenue. That would be 100,000 divided by 5,000.00(100,000/5,000). The Allocation Rate is 0.02 for each of dollar of patient services revenue. = 100,000/ 5,000,000 = 0.02 for each dollar of patient services revenue. 2 b What is the allocation rate if hours of housekeeping services department is used as the cost driver? Allocation rate = cost pool/ hours of housekeeping department = 100,000/ 5000 = $20 per hour of services provided. 3 What is a cost-volume-profit (CVP) analysis and why is it useful to health services managers? Profit analysis is an analytical technique used to analyze the effects of volume changes on costs, and hence this analysis...
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...“Ruger Clinic” Rosalind Carter Ellis Dr. Merle Point HSA 525: Health Financial Management-Assignment # 2 January 28, 2012 Introduction: The Housekeeping Service department of Ruger Clinic, a multispecialty practice in Toledo, Ohio, had $100,000 in direct costs in 2007. These costs must be allocated to Ruger’s three revenue-producing patient services departments using the direct method. Two cost drivers are under consideration: patient services revenue and hours of housekeeping services used. The patient services departments generated $5million in total revenues in 2007, and to support these clinical activities, they used 5,000 hours of housekeeping services. 1 What is the value of the cost pool? The allocated amount of the cost pool is $100,000 which is the result of the Housekeeping Service department’s direct costs for 2007. 2 What is the allocation rate if: A. Patient services revenue is used as the cost driver? According to Gapenski (2008), the cost driver is the basis which the cost poll is allotted. Therefore, the 2007 cost pool allocation amount divided by the 2007 generated patient revenues will result in an allocation rate of 0.02 ($100,000 / $5,000,000 = 0.02) B. Hours of housekeeping services is used as the cost driver? The 2007 cost pool allocation amount divided by the total hours (cost driver) of housekeeping services will result in an allocation rate of $20.00 per hour ($100,000 / 5,000 = 20.) 3 What is a cost-volume-profit (CVP) analysis and why...
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...The Housekeeping Service department of Ruger Clinic, a multispecialty practice in Toledo, Ohio, had $100,000 in direct costs in 2007. These costs must be allocated to Ruger’s three revenue-producing patient services departments using the direct method. Two cost drivers are under consideration :patient services revenue and hours of housekeeping services used. The patient services departments generated $5 million in total revenues in 2007, and to support these clinical activities, they used 5,000 hours of housekeeping services. 1. What is the value of the cost pool? The value of cost pool is 100,000 2. What is the allocation rate if:? a. Patient services revenue is used as the cost driver? Allocation Rate = Cost / Patient service revenue = 100,000 / 5,000,000 = 0.02 per patient service revenue b. Hours of housekeeping services is used as the cost driver? Allocation Rate = Cost / Book keeping service = 100,000 / 5,000 = 20 per housekeeping hours 3. What is a cost-volume-profit(CVP) analysis and why is it useful to health services managers? Cost-volume-profit analysis is a simple but flexible tool for exploring potential profit based on cost strategies and pricing decisions. While it may not provide detailed analysis, it can prevent "do-nothing" management paralysis by providing insight on an overview basis. Even entities without a profit goal find CVP useful. Governmental agencies use the analysis...
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...HOUSE KEEPING SERVICE DEPARTMENT OF RUGER CLINIC Ruger Clinic Assignment 2 Healthcare Financial Management HSA House Keeping Service Department of Ruger Clinic Wiley (2004) defines cost volume profit (CVP) as an accounting method that is used to analyzes changes in profit as they are related to sales, volume, cost and pricing. This is an important tool for managers because the information the analysis provides is used to project various operation requirements. A cost volume profit analysis reflects: which product or service should be focused on, the volume needed to reach the maximum profit requirements, the amount of revenue required to minimize losses, how to manage fixed cost, how to budget and it can identify areas of risk (Wiley, 2004). The Coleco Adam was a word processor that was used in the work place to run reports and it was also used as a computerized gaming program toy for children (Peel, 1984). Coleco had great expectations for the Adam; it was expected to be the item that would allow Coleco to take over the children’s electronic game market for the Christmas holiday season in 1982 (Wiley, 2004). What Coleco expected and what actually happened was two different things. Coleco also manufactured a doll called the ‘Cabbage Patch’. Both the Adam and the Cabbage Patch Doll were introduced to the market during the 1982 holiday season, the Cabbage Patch Doll became the number one selling item...
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...Introduction to Healthcare Finance and Accounting MHA 525 Home #2 Chapter 5-6 5.1) Explain the differences between fixed cots, semi fixed cots, variable costs? Costs- can be classified by their relationship to the amount of services provided and relationship to unit (department) being analyzed. Cost does not equal cash flow. [Cost – referred to as activity, utilization or volume] Variable Costs are those costs that are expedited to increase and decrease with volume ( patient days, number of visits, gloves, syringes needed…)— in total variable costs the cost rate remains the same. Fixed Costs are the costs that are expected to remain constant regardless volume within some relevant range = ( is the range output [volume] over which the organizations cost structure holds) Semi-fixed costs are those that are fixed at two or more values within the relevant range. IA semi fixed cost is one that is [ fixed over some range of volume but the range is smaller than the relevant range used in analysis. Page 154 book 5.3 shows this ( complex ). 5.3) A. What is cost volume –profit (CVP) analysis? B. Why is it so useful to health service managers? A. Cost Volume Profit (CVP) is used to assess the effects of volume changes on costs- lets managers of alternative assumptions regarding costs, volume, processes. Total costs= Fixed + Total variable costs Cost-Volume-Profit (CVP) analysis is a managerial accounting technique that is concerned with...
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...FINANCIAL MANAGEMENT The Housekeeping Service department of Ruger Clinic, a multispecialty practice in Toledo, Ohio, had $100,000 in direct costs in 2007. These costs must be allocated to Ruger’s three revenue-producing patient services departments using the direct method. Two cost drivers are under consideration: patient services revenue and hours of housekeeping services used. The patient services departments generated $5million in total revenues in 2007, and to support these clinical activities, they used 5,000 hours of housekeeping services. 1) What is the value of cost pool? Sol)A critical part of cost measurement at the subunit level is the assignment or allocation, of indirect costs. Cost allocation is essentially a pricing process within the organization whereby managers allocate the costs of one department to other departments. To assign costs, two important elements must be identified: a cost pool and a cost driver. A cost pool is a grouping of costs that must be allocated. Hence the value of Cost pool for the above question is $100,000. 2) What is the allocation rate if: a. Patient services revenue is used as the cost driver? Sol) Allocation rate = Cost pool/patient services revenue = $ 100,000/$5,000,000 = $0.02 per dollar of patient services revenue. b. Hours of housekeeping services is used as the cost driver? Sol) Allocation rate = Cost pool/hours of housekeeping services = $100,000/5000 ...
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...In Cold Blood Truman Capote I. The Last to See Them Alive The village of Holcomb stands on the high wheat plains of western Kansas, a lonesome area that other Kansans call "out there." Some seventy miles east of the Colorado border, the countryside, with its hard blue skies and desert-clear air, has an atmosphere that is rather more Far West than Middle West. The local accent is barbed with a prairie twang, a ranch-hand nasalness, and the men, many of them, wear narrow frontier trousers, Stetsons, and high-heeled boots with pointed toes. The land is flat, and the views are awesomely extensive; horses, herds of cattle, a white cluster of grain elevators rising as gracefully as Greek temples are visible long before a traveler reaches them. Holcomb, too, can be seen from great distances. Not that there's much to see simply an aimless congregation of buildings divided in the center by the main-line tracks of the Santa Fe Rail-road, a haphazard hamlet bounded on the south by a brown stretch of the Arkansas (pronounced "Ar-kan-sas") River, on the north by a highway, Route 50, and on the east and west by prairie lands and wheat fields. After rain, or when snowfalls thaw, the streets, unnamed, unshaded, unpaved, turn from the thickest dust into the direst mud. At one end of the town stands a stark old stucco structure, the roof of which supports an electric sign - dance - but the dancing has ceased and the advertisement has been dark for several years. Nearby is another building...
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...In Cold Blood Truman Capote I. The Last to See Them Alive The village of Holcomb stands on the high wheat plains of western Kansas, a lonesome area that other Kansans call "out there." Some seventy miles east of the Colorado border, the countryside, with its hard blue skies and desert-clear air, has an atmosphere that is rather more Far West than Middle West. The local accent is barbed with a prairie twang, a ranch-hand nasalness, and the men, many of them, wear narrow frontier trousers, Stetsons, and high-heeled boots with pointed toes. The land is flat, and the views are awesomely extensive; horses, herds of cattle, a white cluster of grain elevators rising as gracefully as Greek temples are visible long before a traveler reaches them. Holcomb, too, can be seen from great distances. Not that there's much to see simply an aimless congregation of buildings divided in the center by the main-line tracks of the Santa Fe Rail-road, a haphazard hamlet bounded on the south by a brown stretch of the Arkansas (pronounced "Ar-kan-sas") River, on the north by a highway, Route 50, and on the east and west by prairie lands and wheat fields. After rain, or when snowfalls thaw, the streets, unnamed, unshaded, unpaved, turn from the thickest dust into the direst mud. At one end of the town stands a stark old stucco structure, the roof of which supports an electric sign - dance - but the dancing has ceased and the advertisement has been dark for several years. Nearby is another building...
Words: 124288 - Pages: 498
