Question
Hello! I am having trouble with my critical thinking assignment this week. I was able to answer the first question, but the second and third
Hello! I am having trouble with my critical thinking assignment this week. I was able to answer the first question, but the second and third question has me confused.Here is the information:
Dr. Massy, who specializes in internal medicine, wants to analyze his sales mix to find out how the time of his
physician assistant, Consuela Ortiz, can be used to generate the highest operating income.
Ortiz sees patients in Dr. Massy's office, consults with patients over the telephone, and conducts one daily
weight-loss support group attended by up to 50 patients. Statistics for the three services are as follows:
Office Visits Phone Calls Weight loss support group
Max # of patient
billings per day 20 40 50
Hours per billing .25 .10 1.0
Billing Rate $50 $25 $10
Variable costs $25 $12 $5
Ortiz works seven hours a day.
Required
1. Determine the best sales mix. Rank the services offered in order of their profitability.
2. Based on the ranking in I, how much time should Ortiz spend on each service in a day? (Hint:
Remember to consider the maximum number of patient billings per day.) What would be the daily total
contribution margin generated by Ortiz?
3. Dr. Massy believes the ranking is incorrect. He knows that the daily 60-minute meeting of the weightloss
support group has 50 patients and should continue to be offered. If the new ranking for the
services is (1) weight-loss support group, (2) phone calls, and (3) office visits, how much time should
Ortiz spend on each service in a day? What would be the total contribution margin generated by Ortiz,
assuming the weight-loss support group has the maximum number of patient billings?
4. Manager Insight: Which ranking would you recommend? What additional amount of total contribution
margin would be generated if your recommendation is accepted?
I've already answered question one. Here is my answers and formulas:
1) Office visits: $50-$25=$25 $25 x .25= $100
Phone calls: $25-$12=$13
$13 x .10= $130
Support group: $10-$5=$5
$5 x 1.0= $5
Ranking: Phone calls, office visits, support group
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started