Assume that Goodhealth Clinic has fixed costs of 1,000,000 and a total cost forecast of 1,500,000 at a volume of 20,000 patients visits.

1- What is the Clinics variable cost rate (variable cost per-visit)

2- What is the estimate of total costs assuming the Clinic had 25,000 visits?

3- At what level of average reimbursement at which the Clinic would breakeven (assuming 20,000 visits)?

4- What is the Clinic surplus if visits were 25,000?

Its asking for breakeven in the first question. Revenues = expenditures

REVENUE $87,419,361 EXPENDITURES $87,937,982 mundo ) E m Generalne General Fund (545) Federal Grants (191) ental Services Entreprise Fund (17) State Grants & Contracts (OS) Acred Reve() Privateer Other (1) Capitalgement-CIPAESEF (1) Special eve nts () PERCENTAGE OF OPERATING BUDGET PER DIVISION The divisional break a DOES NOT include s pecial 6 149 The yellow box in the previous figure lists the share of operating budget broken out into six divisions: Percentage of Operating Budget per Division: 1. Administration 2. Community and Behavioral Health 3. Medical Examiner 4. Public Health Investigations 5. Animal Protection 6. Environmental Quality and Sustainability 40% a. Allocate the $87,937,982 in expenditures to each division. Note that grants and special revenue funds were not allocate to the divisions (20 points) b. As described in the report, Administration "empowers. by providing leadership, support, and resources to all DDPHE divisions". Allocate administrative expenditures to each of the remaining units using two cost drivers: 1. Expenditures prior to allocation (as determined in Part a) and 2. Square footage (see below). (20 points) Square feet of office space, by division Square (Note: There are not an actual estimate, numbers are made up): Footage 1. Administration N/A 2. Community and Behavioral Health 5,500 3. Medical Examiner 25.000 4. Public Health Investigations 6,500 5. Animal Protection 35,000 6. Environmental Quality and Sustainability 20,000 c. Given the description of division activities in the report, which cost driver would you recommend as the most fair, accurate distribution of administrative costs? Justify your reasoning. (20 points) The yellow box in the figure lists the share of operating budget broken out into six divisions Percentage of Operating Budget per Division 1. Admi S% 2. Com 3. Medi 14% 4 Publi Anim 19% 6 Envir 10 a. Allocate the $87.937.982 in expenditures to each division. Note that grants and special revenue funds were not allocate to the divisions (20 points) Step 1: Sulstract out the grants and special revenue fund expenditures Step 2. Allocate the remaining expenditures Total Expenditures less Grants and Special Revenue Fund: Expenditure per division 1. Admi 2 Comi 3 Medi Publi 5. Ani 6. Envir 40% 5% 14% 166 1996 b. Allocate administrative expenditures to each of the remaining units using two cost drivers: 1. Expenditures prior to allocation as determined in Parta) and 2 Square footage. Step 1: Compute the % of the cost drivers Square Footage Expenditure per division Square Feet % S from part a 1. Admi NA NA 2. Com 5.500 3. Medi 25.000 4. Publi 6500 5. Anime 35,000 6. Environmental quality and sustainability 20.000 Total: 92.000 0% $0 Step 2. Allocate the costs Cost Drivel Square Footage Allocation Total Expenditure Expenditure per division Allocation Total Expenditure 1. Administration 2. Community and Behavioral Health 3. Medical Examiner 4. Publil Health Investigations 15. Anintal Protection 6. Environmental quality and sustainability Total: SOSO Check: SO c. Given the description of division activities in the report, which cost driver would you recommend as the most fair, accurate distribution of administrative costs? Justify your reasoning