Module 2 - SLP
Health Care Services Reimbursement
Foundation for this assignment
In 2013, the Gastroenterology Clinic of Pearland Medical Center had revenue totaling $14,550,400. The Gastroenterology Clinic costs data for a 12-month period from January 2013 through December 2013 were reported as follows:
|Month, 2013||Number of Patient Visits||Gastroenterology Clinic Costs, $|
Task for this assignment:
Find the fixed and variable portion of costs using the high-low method.
Calculate the contribution margin, the contribution margin ratio, and the per-visit revenue, costs, and operating income.
Discuss the importance of computation of the contribution margin in evaluating the relationship of cost, volume, and profit.
In deciding to continue (or to discontinue) a service, which revenues currently do not cover total cost, which is more important in the short run, variable cost or fixed cost? In the long run (with more service volume)? Why?
SLP Assignment Expectations
Assignment Expectations, in order to earn full credit:
Length: 3 - 4 pages, excluding title page and references.
Assessment and Grading: Your paper will be assessed based on the grading rubric that is linked within the course.
Health Care Finance
Length: 2 pages (550 Words)
Health Care Finance
High-Low method is a technique used to split mixed cost into its fixed and variable components.
|Variable Cost per Unit =||y2 − y1|
|x2 − x1|
y2 is the total cost at highest number of patients;
y1 is the total cost at lowest number of activities;
x2 are the highest number of patients;
x1 are the lowest number of patients:
Therefore: Variable cost= (914,400-825,325)/ (7620-5325)
= $ 38.79.
Total cost = 914,400-(7620*38.79)
= $ 618,820.2
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