Financial Management I Worksheet - Part 1

Case Scenario 1: Hospitals A, B, and Care the same with the exception of their treatment of internal charges.

The foodservice department at Hospital A does not charge the cost of ward supplies, nourishments, and catering to the receiving departments.

Hospital B permits the transfer credit of floor stock, nourishments, and catering at the equivalent raw food cost.

Hospital C is managed by a contract foodservice company. Floor stock and nourishments are charged to the receiving department units at raw food cost, but internal catering is charged at the same markup as the external catering as part of the company's agreement with administration. This contractual agreement is often a result of an incentive- based fee structure that awards a contractor a percentage of revenue.

	Hospital A	Hospital B	Hospital C
Patient days TYD:	20,000	20,000	20,000
Gross Dept expenses:	$700,000	$700,000	$700,000
	YTD Food Cost	YTD Sales & Charges	YTD Food Cost	YTD Sales & Charges	YTD Food Cost	YTD Sales & Charges
Floor stock, nourishments	$15,000	$0.00	$15,000	$15,000	$15,000	$15,000
Internal catering	$30,000	$0.00	$30,000	$30,000	$30,000	$75,000
Catering cash	$10,000	$ 25,000	$10,000	$ 25,000	$10,000	$ 25,000
Cafeteria cash	$68,000	$150,000	$68,000	$150,000	$68,000	$150,000
Vending cash	$10,000	$ 20,000	$10,000	$ 20,000	$10,000	$ 20,000

Note: YTD = Year-to-Date

Answer the following questions:

1. Which hospital earned the highestrevenue?
2. Which hospital has the lowest revenue per patient day?
3. Which hospital has a Food Cost Percentage of 55.41%?
4. Based on the gross department expenses at the hospitals, total food cost represents what percentage gross expenses.
5. What is the gross department expense per patient day at each hospital?
6. What is the sales mix ratio of internal catering at Hospital C?

How would you describe the effects of charging a "mark-up" for internal catering and YTD sales &