Saturday, March 25, 2017

COST-VOLUME-PROFIT

Since nahirapan akong mag hanap nito. I will post this. hahaha :D

This was the problem given to us by out professor. I hope this will help sa mga students na nahihirapan sa accounting.

I include my computation. :D 

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Columbus Hospital operates a general hospital but rents space and beds to separate entities for specialized treatment such as pediatrics, maternity, psychiatric etc. Columbus charges each separate entity for common services to its patients like meals and laundry and for all administrative services such as billings , collections. All uncollectible accounts are charged directly to the entity. Space and bed rentals are fixed for the year.

For the entire year ended June 30, the pediatrics department at Columbus hospital charged each patient an average of P65 per day, had a capacity of 60 beds, operated 24 hours per day for 365 days , and had revenue of P1,138,800.

Expenses charged by the hospital to the pediatrics department for the year ended June 30 were:

Basis of Allocation:

                                                                              Patient Days                    Bed Capacity          
Dietary ………………………………………....…P42,952
Janitorial………………………………………………………................…P12,800
Laundry……………………………………….......P28,000
Lab, others ……………………………………......P47,800
Pharmacy ………………………………................P33,800
Repairs and maintenance …………………............P5,200 ……………….P7,140
General administrative services .......................................................…........P131,760
Rent ………………………………………………………………………..P275,350
Billings and collections ……………………...........P40,000
Bad debt expense …………………………............P47,000
Others ………………………………………..........P18,048 ………………P25,980
Total  ………………………………………............P262,800……………..P453,000

The only personnel directly employed by the Pediatrics Department are supervising nurses, nurses and aides. The hospital has minimum personnel requirements based on total annual patient days. Hospital requirements beginning at the minimum, expected level of operation follows:

Annual Patient Days
Aides
Nurses
Supervising nurses
10,000 -14,000
14,001 - 17,000
17,001 - 23,725
23,726 - 25,550
25,551 - 27,375
27,376-  29,200
21
22
22
25
26
29
11
12
13
14
15
16
4
4
4
5
5
6

The staffing levels below represent full-time equivalents, and it should be assumed that the Pediatrics departments always employs only the minimum number of required fulltime equivalent personnel. 
Annual salaries for each class of employee follow: supervising nurses, P18,000 ;nurses, P13,000; and aides, P5,000. Salary expense for the year ended June 30 for supervising nurses, nurses, and aides was P72,000, P 169,000 and P110,000, respectively.

The Pediatrics Dept. operated at 100% capacity during 111 days of the past year. It is estimated that during 90 of these capacity days, the demand average 17 patients more than capacity and even went as high as 20 patients more on some days. The hospital has an additional 20 beds available for rent for the coming fiscal year.

1. The variable expense per day is
a. 15.08
b. 12.50
c. 15.00
d.50.00

Variable cost per patient day = Total Variable cost for the year / total patient day
262,800/17,508 = 15

No. of patient days = Total Revenue for the year/ revenue per patient day
1,138,800 / 65 per day = 17,508

2. The Contribution margin per patient day is
a. 49.92
b. 52.50
c. 50.00
d. 52.00

Contribution Margin = revenue/patient day – variable cost/patient day
65 per day – 15 = 50 per patient day

3. How many patient days are necessary to cover fixed cost for bed capacity and supervisory nurses?
a. 9,500
b. 11,500
c. 12,500
d. 10,500

Fixed costs for bed capacity                                    P 453,000
Salary, supervisory nurse                                              72,000
Total                                                                     P 525,000

Number of patient days required to cover fixed costs for bed capacity and salaries of supervisory nurse
525000÷ 50            =                                                  10,500

4. The number of patients days need to cover total cost
a. 14,200
b. 15,200
c. 15, 820
d. 14, 220

First Range:
Fixed costs based on capacity

453,000
Salaries:


Aides  21 x 50,000
105,000

Nurses 11 x 130,000
143,000

Supervisor 4 x 180,000
  72,000
320,000
Total

773,000

Breakeven calculation:  773,000÷ 50               15,460

The calculated breakeven point of 15,460 is invalid because the number falls under the second range wherein the amount of fixed costs that had been used are not relevant to that range.


Second Range (Final calculation):
Total fixed cost,                                                                                     773,000
Additional fixed cost:
1 aide                                                                     5,000
1 nurse                                                                 13,000
Total                                                                        791,000
Breakeven in patient days:
791,000 ÷ 50                                                      158,240

5. If the pediatrics department rented additional beds and all other factors remain the same as in the last year, what would be the increased in revenue?

a. 99, 450
b. 87,750
c. 105,450
d. 89, 750

Additional revenues if 20 beds are rented:
90 days @ 17 patient days x 65                               99,450



6. Continuing to consider the 20 additional rented beds, the increased in total variable cost applied per patient is

a. 22,935
b. 22,950
c. 22,965
d. 23,935

Increase in variable cost should be calculated based on additional patient days for 90 days at P15 per patient day.

17 beds x 90 days x P15                                                     P22, 950


7. Refer to the information given in the problem. What is the increased fixed cost for bed capacity, given the increased bed number of beds?
a. 151,000
b. 173,950
c. 147,000
d. 152,000

The increase in fixed cost based on bed capacity:
453,000 ÷ 60 x 20                                                      P151,000


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