Thin Co is a private hospital offering three types of surgical procedures known as A, B and C. Each of them uses a pre-operative injection given by a nurse before the surgery.Thin Co currently rents an operating theatre from a neighboring government hospital.The managing director of the company is keen to maximize profits and has heard of something called throughput accounting, which may help him to do this. The following information is available:

(1) All patients go through a five-step process, irrespective of which procedure they are having. This process involves an advisor, nurse, and an anesthetist and recovery specialist.

(2) The price of each procedure A, B and C is $2,700, $3,500 and $4,250 respectively.

(3) the only materials cost relating to the procedures are for the preoperative injections given by the nurse, the anesthetics and is ad these are as follows:

	Procedure A	Procedure B	Procedure C
	$ per procedure	$ per procedure	$ per procedure
Pre-operative nurses injection	700	800	1,000
Anesthetics	35	40	45
Dressing	5.60	5.60	5.60

(4) There are five members of staff employed by Thin Co. Each works for a standard 40-hour week for 47 weeks of the year, a total of 1,880 hours each per year. Their salaries are:

• Advisor: $45,000 per annum
• Nurse: $38,000 per annum
• Anesthetists $75,000 per annum
• Surgeon: $90,000 per annum
• Recovery specialist $50,000 per annum

The only other hospital costs [comparable to factory costs in the traditional manufacturing environment] are general overheads, which include the theater rental costs and amounts to $250,000 per annum.

(5) Maximum annual demand for A,B and C is 600, 800 and 1200 procedures respectively. The surgeons hours have been correctly identified as a bottleneck resource.

Time spent by the surgeon on each procedure is as follows:

Procedure A	Procedure B	Procedure C
Hours per procedure	Hours per procedure	Hours per procedure
0.75	1.0	1.25

Required:

(a) Calculate the TPAR for procedure C. (15 marks)

Note: it is recommended that you work in hours rather than minutes.

(b) The return for factory hour for products A and B has been calculated and is $2,612.53 and $2,654.40 respectively. The TPAR for A and B have also been calculated and is 8.96 and 9.11.

Calculate the optimum product [procedure] mix and the maximum profit per annum.

(5 marks)

(c) In the context of the question, identify five ways that the TPAR on C and be improved. (5 marks)