Budgeting, Costing and Casemix Essay Example | Topics and Well Written Essays - 1250 words

Budgeting, Costing and Casemix - Essay Exampleas the NPV is slight than zero so it is not advisable for the university to invest in this project. Had the NPV been greater than zero it would make sense experience to invest in this venture. Question Five divorce (a) The state of revenues and expenses for the hospital are as shown in the circumvent below Revenues Direct Indirect 16 5.5 1.5 5 3.3 3.8 6 2.8 1.6 - - 4.4 - - 2.55 27 11.6 13.85 Projected gain ground 1.55 Note All values in millions of dollars. Therefore the hospitals projected profit for the 2010 monetary year is $1.55 million. Part (b) The allocation of indirect cost to the patient services departments are indicated in the table below along with the agreed cost drivers. Indirect Cost Cost Driver Cost (Millions of Dollars) financial Services Patient Revenue 1.5 Maintenance Space Utilisation 3.8 Housekeeping Labour Hours 1.6 Administration profits Dollars 4.4 Personnel Salary Dollars 2.55 The breakup of the indirect c osts to apiece department is described below. Accounting Salaries split up equally amongst all common chord departments, therefore cost to each department is 0.5 million dollars. Maintenance divided up amongst all three departments found on space utilisation (covered area), cost to each department is indicated in the table below surgical incision Space Utilisation (square meters) region of Total Space Cost (millions of dollars) quotidian do 199,800 66 2.525 Laboratory 39,600 13 0.50 radioscopy 61,200 20 0.774 Housekeeping divided amongst all three departments based on labour hours utilised, cost to each department is indicated in the table below Department Labour Hours Percentage of Total Cost (millions of dollars) Routine Care 76000 84% 1.34 Laboratory 6000 7% 0.105 Radiology 9000 10% 0.158 Administration divided amongst all three departments based on salary dollars utilised, cost to each department is indicated in the table below Salary Dollars Percentage of Total Cost (mi llions of dollars) Routine Care 5,709,000 56% 2.47 Laboratory 2,035,000 20% 0.879 Radiology 2,439,000 24% 1.05 Personnel divided amongst all three departments based on salary dollars utilised, cost to each department is indicated in the table below Salary Dollars Percentage of Total Cost (millions of dollars) Routine Care 5,709,000 56% 1.40 Laboratory 2,035,000 20% 0.50 Radiology 2,439,000 24% 0.60 Part (c) The allocation method utilised is well reasoned and makes a lot of sense on story and on ground. The accounting salaries would in principle get divided amongst all three departments equally. The maintenance costs would get divided amongst all three departments based on the floor space allocated in principle. all the same it must be taken in mind that the routine care department would have olive-sized equipment that would require large maintenance costs but the laboratory and the radiology department would furnish such(prenominal) equipment e.g. centrifuges, x-ray machines and the like. Therefore using total space occupied alone would not really glow the state of maintenance expenses alone because routine care would always assume more space while laboratory and radiology would use