DIRECTIONS:

Healthcare Financial Management and Economics Week 8 Assignment 2 Gulf Imaging Center Assignment 2: Break-Even Point Formulas Before making hiring or purchasing decisions, healthcare organizations must consider whether the decision is financially profitable. By calculating break-even points, organizations are able to examine actual costs and make more sound financial decisions. For this Assignment, you use data from the Gulf Imaging Center and calculate break-even points. Scenario: Gulf Imaging Center is a small imaging center with two analogue film or screen units. As the director of the center, Juanita Hernandez has been asked to determine if the current staffing is correct for her place or should she add another technologist. She currently uses 2 mammography units, 2 technologists, and 1 aide. She has analyzed the current costs and determined the following: Reimbursement per screen $140 Equipment lease per month ($12,000 per machine) $24,000 Technologists costs per mammography $35 Technologists aide per mammography $20 Variable cost per mammography $13 Equipment maintenance per month ($9,000 per machine) $18,000 To prepare for the Assignment: Examine the Gulf Imaging Center scenario. Reflect on how you will use the provided financial data to calculate break-even points. Refer to Chapter 9 of Financial Management of Health Care Organizations: An Introduction to Fundamental Tools, Concepts and Applications for additional guidance. The Assignment: Given the above information, use the Week 8 Assignment 2 Break Even Excel Template to answer these items as a Department: A. Solve for monthly volume to break even. B. Solve for monthly volume needed to break even at desired $5,000 per month profit level. C. Solve for volume needed to break even at new reimbursement of $110 per screen and no profit. D. Solve for volume needed to break even with an additional technologist.

Break-Even Point

Part a.

Part b.

Part c.

Part d.

Givens From Problem:

Costs

Dollars

No.

Dollars

No.

Dollars

No.

Dollars

No.

A

B

C

D

E

F

G

H

I

A

B

C

D

Reimbursement

Reimbursement

Reimbursement

Reimbursement

Per Mammography (P)

Fixed Costs

Fixed Costs

Fixed Costs

Fixed Costs

Total Fixed Costs (TFC)

Total Fixed Costs (TFC)

Total Fixed Costs (TFC)

Total Fixed Costs (TFC)

Variable Costs

Variable Costs

Variable Costs

Variable Costs

Variables Costs based on Dollar Amount per Unit

Variables Costs based on Dollar Amount per Unit

Variables Costs based on Dollar Amount per Unit

Variables Costs based on Dollar Amount per Unit

Sum:

Sum:

Sum:

Sum:

Break-Even Point

Break-Even Point

Break-Even Point

Break-Even Point

Break-Even Units (X)

X = TFC / (P - V)

Break-Even Units (X)

X = TFC / (P - V)

Break-Even Units (X)

X = TFC / (P - V)

Break-Even Units (X)

X = TFC / (P - V)

Targeted Profit

Targeted Profit

Targeted Profit

Targeted Profit

Targeted Profit (TF)

Targeted Profit (TF)

Targeted Profit (TF)

Targeted Profit (TF)

Units required to reach targeted TF, X = (TFC + TF) / (P-V)

Units required to reach targeted TF, X = (TFC + TF) / (P-V)

Units required to reach targeted TF, X = (TFC + TF) / (P-V)

Units required to reach targeted TF, X = (TFC + TF) / (P-V)