eBook Calculator Cost Behavior, High-Low Method, Pricing Decision St. Teresa's Medical Center (STMC) offers a number of specialized medical services, including neuroscience, cardiology, and oncology. SIMC's strong reputation for quality medical care allowed it to branch out into other services. It is now ready to expand its orthopedic services and has just added a free-standing orthopedic clinic offering a full range of outpatient, surgical and physical therapy services. The cost of the orthopedic facility is depreciated on a straight line basis. All equipment within the facility is based Since the clinic had no experience with in patient orthopedic services (for patients recovering from hip and knee replacements, for example), I decided to operate the orthopedie center for two months before determining how much to charge per patient day on an ongoing basis. As a temporary measure, the dini adopted a patient.day charge of $190, an amount equal to the fees charged by a hospital specializing in orthopedic care in a nearby city, This initial per day charge was quoted to patients entering the orthopedic center during the first two months with assurances that if the actual operating costs of the new center justified it, the charge could be less. In no case would the charges be more. A temporary policy of billing after 60 days was adopted so that any adjustments could be made. The orthopedic center opened on January 1. During January, the center had 4,200 patient days of activity. During February, the activity was 4,600 patient days. Costs for these two levels of activity output are as follows: 4,200 Patient 4,600 Patient Days Days Salaries, nurses $ 52,500 $ 52,500 Aides 31,100 31,100 266,600 Pharmacy 245,000 104,500 112,500 Laboratory Depreciation 23,400 23,400 214,620 235,060 Laundry Check My Work 4 more Check My Work uses remaining Save and Submit Assignment for Grading 5:25 PM eBook Calculator Salaries, nurses Aides Pharmacy Laboratory 4,200 Patient 4,600 Patient Days Days $ 52,500 $ 52,500 31,100 31,100 245,000 266,600 112,500 Depreciation 23,400 104,500 23,400 214,620 26,900 Laundry 235,060 Administration 28,900 Lease (equipment) 30,100 30,100 Required: 1. Classify each cost as fixed, variable, or mixed, using patient days as the activity driver. Assume that the Pharmacy & Laboratory are in house and that the Laundry is shipped out" to a third party vendor Salaries, nurses Aides Pharmacy Laboratory Depreciation Check My Work 4 more Check My Work uses remaining Save and Et Submit Assignment for Gra Lease (equipment) 1. Use the high-low method to separate the mixed costs into foved and variable. Laboratory: Pharmacy Variable $ per patient day per patient day Fixed b. The administrator of the orthopedic center estimated that the center will average 4,300 patient days per month. If the center is to be operated as a nonprofit organization, Hetermine the amount it will need to charge per patient day? Round your interim calculations and final answers to the nearest cent. Charge per patient day How much of this charge is variable? Variable charge per patient day How much of the charge per patient day is fixed? Fixed charge per patient day H. Suppose the orthopedic center averages 4,900 patient days per month. How much would need to be charged per patient day for the center to cover its costs Round your answer to the nearest cent. per patient day The main reason why the charge per patient day decreased as the activity output increased is because: Check My Work 4 more Check My Work uses remaining Save and Exit Submit Assignment for Grading
