Make or Buy Rashad Rahavy, M.D., is a general practitioner whose offices are located in the South Falls Professional Building. In the past, Dr. Rahavy has operated his practice with a nurse, a receptionist/secretary, and a part-time bookkeeper. Dr. Rahavy, like many small-town physicians, has billed his patients and their insurance companies from his own office. The part-time bookkeeper, who works 10 hours per week, is employed exclusively for this purpose. North Falls Physician's Service Center has offered to take over all of Dr. Rahavy's billings and collections for an annual fee of $6,000. If Dr. Rahavy accepts this offer, he will no longer need the bookkeeper. The bookkeeper's wages and fringe benefits amount to $15 per hour, and the bookkeeper works 50 weeks per year. With all the billings and collections done elsewhere, Dr. Rahavy will have two additional hours available per week to see patients. He sees an average of three patients per hour at an average fee of $30 per visit. Dr. Rahavy's practice is expanding, and new patients often have to wait several weeks for an appointment. He has resisted expanding his office hours or working more than 50 weeks per year. Finally, if Dr. Rahavy signs on with the center, he will no longer need to rent a records storage facility for $100 per month.

Conduct a relevant cost analysis to determine if it is profitable to outsource the bookkeeping. Calculate the net advantage (disadvantage) of outsourcing the bookkeeping. Use a negative sign with your answer to indicate a net disadvantage, if applicable.

$Answer

(c.) A local businessman on a break overhears the conversation with the leader and offers the owners a one-year contract to feed 300 of the businessman's employees one meal each day at a special price of $5.00 per meal.

Compute the net advantage (disadvantage) of accepting the contract. Only use a negative sign with your answer to indicate a net disadvantage. Otherwise, do not use negative signs with answers.

Daily contribution from special order	$Answer
Daily opportunity cost	Answer
Net advantage (disadvantage)	$Answer

Based on your above results, should the restaurant owner accept this offer?

The restaurant owner should accept the offer.

The restuarant owner should not accept the offer.

1.00 points out of 1.00

QUESTION 5

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Sell or Process Further Port Allen Chemical Company processes raw material D into joint products E and F. Raw material D costs $4 per liter. It costs $100 to convert 100 liters of D into 60 liters of E and 40 liters of F. Product F can be sold immediately for $4 per liter or processed further into Product G at an additional cost of $6 per liter. Product G can then be sold for $14 per liter. Determine whether Product F should be sold or processed further into Product G.

Calculate the net advantage (disadvantage) of further processing.

Use a negative sign with your answer to indicate a net disadvantage (if applicable).

$Answer

per liter