2:15 < QUESTION 2 THROUGHPUT ACCOUNTING AA 25 marks Laserfix is a private hospital offering three types of surgical procedures known as A, B and C. Each of them uses a pre-operative injection given by a nurse before surgery. The company currrently rents an operating theatre from a neighbouring government hospital. The managing director of the company is keen to maximise profits and has heard of something called throughput accounting', which may help him to do this. The following information is available: (1) All patients go through a five step process, irrespective of which procedure they are having. The process involves an advisor, nurse, anaesthetist, surgeon, and recovery specialist. (2) The price for each procedure is Price for procedure. A B C $ $ $ 2,500 3,400 4,200 (3) The only materials' costs relating to the procedures are the pre-operative injections given by the nurse, the anaesthetic and the dressings. These are as follows: Pre-operative injectionss Anaesthetic Dressing A B C $ per procedure $ per proce$ per procedure 600.00 25.00 700.00 900.00 35.00 50.00 4.80 4.80 4.80 (4) There are five members of staff employed by Laserfix. Each works a standard 40-hour week for 47 weeks of the year, a total of 1,880 hours each per annum. Their salaries are as follows: Advisor Nurse Anaesthetist Surgeon Recovery specialist Per annum/$ 40,000 40,000 72,000 85,000 45,000 .ILTE The only other hospital costs (comparable to 'factory costs' in a traditional manufacturing environment) are general overhads, which includes the theater rental costs, and amounts per annum to $ 200,000 (5) Maximum annual demand for each procedure. A B Annual demand 500 700 C 800 Surgeon's hours have been correctly identified as the bottleneck resource. The time spent by the surge on on each procedure is as follows: B C Surgeon's hours hours/procedure hours/proc hours/procedure 0.90 1.20 0.60 Part hours are shown as decimals e.g. 0.24 hours = 0.24 x 60 minutes = 14.4 minutes. Required: (a) Calculate the throughput accounting ratio for each procedure. (b) Interpret your results. (c) Determine the optimum product (procedure) mix and the maximum profit per year. 10 marks 5 marks 10 marks. utechonline.utech.edu.jm