House Keeping Department of Ruger Clinic Essay

For example, in a small county operated facility the funding may be a mix of the county budget, grants, federal funds and local private funds. The staff cost is indirect because the entire staff is shared contractually between the hospital, community health center and nursing home. The physician, nurse and the administrator may all have unique funding sources but, share some responsibilities amongst the three facilities. Carving out time spent working for each facility becomes convoluted quickly.

With the current systems of accounting for profit and losses the Dialysis Center records the pharmaceutical used in patient services as revenue and then records the same amount as an expense. Because general overhead is allocated on department patient service revenue the record in the system increases the general overhead allocation of the Dialysis Center.

According to, Skills for Business Decisions, “Cost-volume-profit (CVP) analysis examines changes in profits in response to changes in sales volumes, costs, and prices.” (Kimmel P.D. 2009) A company’s profit is the CVP profit equation of Profit = Revenue – Expenses. A Cost-volume-profit (CVP) analysis consists of five basic components that include:

2. (TCO A)  The costs of staffing and operating the accounting department at Central Hospital would be considered by the Department of Surgery to be (Points : 6)

Based on my understanding facilities have fixed expenses like their utilities, rent, malpractice insurance and the list can go on of the things that will remain the same every month despite the volume in patients. They also have variable expenses like payroll, marketing, supplies and the list can also go on in expenses that can vary each month depending of the volume of business the department is doing. I think no one is exempt of change so I will choose the variable expense department. A fixed expense departments might not change in production because everything stays the same and their job is not directly involved with situations that can make a budget vary. Variable expense departments, are usually the ones in direct contact with the patients

Break even analysis is reliable as it is made from the budget and it gives a financial structure to the business. The data used for break-even, the business try to make the data as accurate as possible. They make this data depending on the previous year’s financial report. That’s why break-even is reliable to estimate current year’s results. In a short run, break-even analysis can be accurate.

Home Depot is a major company that is in the construction and home improvement business. When the housing market took a turn for the worse, the revenue was 3 percent lower in 2006 and 21 percent lower in 2007. The accounting concept that is used for Home Depot is operating leverage. According to Lev (1974), a firm's operating leverage is defined as the ratio of the fixed to variable operating costs (p. 627). When the operating leverage is high, the fixed cost is higher than the variable costs (Edmonds, Tsay & Olds, 2011). The 3 percent decline in sales activity is caused by the 3 percent decline in variable costs for Home Depot. The variable cost changed because the fixed cost remains the same event if there is a changed in sales. The decline

Analysis and modification of both LTD and shareholder’s equity is needed for a clear identification of leverage. Exhibit 4 shows the major contributing factors to each company’s shareholder’s equity: common stock, additional paid-in capital, retained earnings, treasury

Comparatively, the HR team and Administrative Support team you mentioned would be indirect costs associated with the department. Similarly, the medical field is much like retail in that it is a service oriented industry. While these teams do not contribute to the direct results of the Acute Care Unit; they are essential to your organization. Additionally, costs for equipment in the administrative

Break-even point analysis is a measurement system that calculates the margin of safety by comparing the amount of revenues or units that must be sold to cover fixed and variable costs associated with making the sales. In other words, it’s a way to calculate when a project will be profitable by equating its total revenues with its total expenses. There are several different uses for the equation, but all of them deal with managerial accounting and cost management (Break-Even Point, n.d.)

Financial flexibility (Solvency and leverage) is a company’s ability to adapt to unforeseen events and opportunities. Leverage means using debt (or other third party funds) to increase earnings for the owners. Table 3 presents some financial flexibility and leverage ratios of Amazon.com from 2005 to 2009 and for Ebay from 2008 to 2009. Amazon.com is a fast growing company and in the fiscal year ended 2004, they had a negative total equity, which could skew the ratios. Therefore, we did not present the ratios in 2004.

A company's break-even point is the amount of sales or revenues that it must generate in order to equal its expenses. In other words, it is the point at which the company neither makes a profit nor suffers a loss. Calculating the break-even point (through break-even analysis) can provide a simple, yet powerful quantitative tool for managers. In its simplest form, break-even analysis provides insight into whether or not revenue from a product or service has the ability to cover the relevant costs of production of that product or service. Managers can use this information in making a wide range of business decisions, including setting prices, preparing competitive bids, and applying for loans.

The personnel budget, being the largest part of the operating budget, consists of multiple factors such as the average daily census, patient acuity, personnel required relating to full-time equivalents (FTEs), as well as productive and non-productive hours. The supplies include medical and office supplies, minor equipment, orientation and training, and travel expenses. Although budgets are based on assumptions, using the previous year’s expenses for personnel and supplies, helps the nurse manager/leader to accurately predict the next year’s budget.

Some of the assumptions of CVP as outlined by accountingformanagenment are: selling price is constant regardless of volume change, costs are linear, with multi-products the sales mix is constant, and manufacturing companies inventories do not change (N.D.). Because of the assumptions

West Company's cost structure will include a larger proportion of variable costs than East Company's cost structure. A firm's operating leverage factor, at a particular sales volume, is defined as its total contribution margin divided by its net income. Since East Company has proportionately higher fixed costs, it will have a proportionately higher total contribution margin. Therefore, East Company's operating leverage factor will be higher.