Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Hi, please help me with requirements 1,2,&3. thank you Good to Go operates a chain of 10 hospitals in the Los Angeles area. Its central

image text in transcribedimage text in transcribed

Hi, please help me with requirements 1,2,&3. thank you

Good to Go operates a chain of 10 hospitals in the Los Angeles area. Its central food-catering facility, Goodman, prepares and delivers meals to the hospitals. It has the capacity to deliver up to 1,460,000 meals a year. In 2017, based on estimates from each hospital controller, Goodman budgeted for 1,050,000 meals a year. Budgeted fixed costs in 2017 were $1,533,000. Each hospital was charged $5.66 per meal-$4.20 variable costs plus $1.46 allocated budgeted fixed cost. (Click the icon to view additional information.) Read the requirements. Requirement 1. How did Hayward calculate the budgeted fixed cost per meal of $1.46 in 2017? Select the formula to show how Hayward calculated the budgeted fixed cost per meal of $1.46 in 2017. Budgeted fixed = cost per meal More Info Recently, the hospitals have been complaining about the quality of Goodman's meals and their rising costs. In mid-2017, Good to Go's president announces that all Good to Go hospitals and support facilities will be run as profit centers. Hospitals will be free to purchase quality-certified services from outside the system. Sam Hayward, Goodman's controller, is preparing the 2018 budget. He hears that three hospitals have decided to use outside suppliers for their meals, which will reduce the 2018 estimated demand to 912,500 meals. No change in variable cost per meal or total fixed costs is expected in 2018. Choos Requirements 1. How did Hayward calculate the budgeted fixed cost per meal of $1.46 in 2017? 2. Using the same approach to calculating budgeted fixed cost per meal and pricing as in 2017, how much would hospitals be charged for each Goodman meal in 2018? What would the reaction of the hospital controllers be to the price? 3. Suggest an alternative cost-based price per meal that Hayward might propose and that might be more acceptable to the hospitals. What can Goodman and Hayward do to make this price profitable in the long run

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Accounting questions