****PLEASE HELP WITH ALL CONCERNS BELOW****

Is it fair for the Dialysis Center to suffer in profitability, and hence for the department head to possibly lose his bonus, just because the Outpatient Clinic needs additional space? Provide justification for your position.

In the past, the medical center aggregated all facility costs and then allocated the total amount on the basis of square footage. This methodology assigned an average cost rate to each patient service department, regardless of whether its space is new or old, prime or poor. The proposed allocation for the Dialysis Center, on the other hand, requires it to bear the true facility costs of its new space.

What are the advantages and disadvantages of the new methodology?

Do you support the new allocation scheme? Provide justification for your position.

If the new allocation method for facility costs is implemented, what should be the facility allocation to the Dialysis Center in 20 years, when the loan (which is the basis for the higher cost allocation) has been paid off and there are no longer any actual facility costs? Provide justification for your position.

Explain how the revenue from medical (pharmacy) supplies is currently handled for profit and loss reporting purposes.

Is there a problem with the current system? Is there a better way of reporting this revenue? Explain.

When all issues related to the decision are considered, what is your recommendation regarding the final allocation amounts? Put your recommendation in the Excel spreadsheet provided for this case. Provide justification for your recommendation.

Enter the appropriate values into the
red cells that currently contain a zero or hyphen. When this is done, any error cells will be corrected
and the base case solution will appear. Note that the model does not contain any uncertainty
analyses, so students will have to create their own if required by the case. Furthermore, students
must create their own graphics output (charts) as needed to present their results.

STUCASE03 4th edition Rio Grande [Compatibility Mode] Excel Ashley Boum - ? Home Insert Page Layout Formulas Data Review View Help Tell me what you want to do Share Copy ?-?? Merge & Center s-% , .00, o C Conditional Format as Cell Formatting TableStyles Styles Sort & Find& Filter Select Insert Delete Format ? , u . t-2.?. ?Clear. Format Painter Clipboard Alignment Number Cells L59 1 CASE 3 2 8/24/09 Student Version Copyright 2010 by FACHE RIO GRANDE MEDICAL CENTER Cost Allocation Concepts 6 This case focuses on cost allocation concepts, specifically the fairness and incentives created by 7 a new allocation system applied to a department that is moving to a new, stand-alone facility 8 The primary thrust of the case is qualitative rather than quantitative, but this model can be used 9 to compare results under altenative allocation schemes 11 The model consists of a complete base case analysis-no changes need to be made to the existing 13 section have been replaced with zeros. Thus, students must enter the appropriate values into the 14 red cells that currently contain a zero or hyphen. When this is done, any error cells will be comected 15 and the base case solution will appear. Note that the model does not contain any uncertainty 16 analyses, so students will have to create their own if required by the case. Furthemore, students 17 must create their own graphics output (charts) as needed to present their results 20 INPUT DATA. 21 22 Dialysis Center Data 23 KEY OUTPUT Dielysis CrOutpetient Ctr Totel CASE3