Health Care Services ReimbursementIn 2013, the Gastroenterology Clinic of Pearland Medical Center...

Question

Health Care Services ReimbursementIn 2013, the Gastroenterology Clinic of Pearland Medical Center had revenue totaling $14,550,400. The Gastroenterology Clinic costs data for a 12-month period from January 2013 through December 2013 were reported as follows:Month,  2013Number of Patient VisitsGastroenterology Clinic Costs, $January6,755945,700February6,620946,660March5,834880,934April6,228927,972May7,554944,250June7,620914,400July7,136949,088August7,440959,760September6,453942,138October5,325825,375November5,588854,964December7,020961,740Find the fixed and variable portion of costs using the high-low method.Calculate the contribution margin, the contribution margin ratio, and the per-visit revenue, costs, and operating income.Discuss the importance of computation of the contribution margin in evaluating the relationship of cost, volume, and profit.In deciding to continue (or to discontinue) a service, which revenues currently do not cover total cost. Which is more important in the short run, variable cost or fixed cost? In the long run (with more service volume)? Why?Length: 3–4 pages, excluding title page and references.I need 4 pages, APA, 4-5 in-text citations, 4-5 references

Aarti J · Accepted Answer

Health care Reimbursement
Course Name
Course Date
Student’s Name
HEALTH CARE REIMBURSEMENT		7
Health Care Service Reimbursement
Find the fixed and variable portion of costs using the high-low method
In the high low method, the cost with the highest number of patient’s visits is subtracted by the lowest number of patients visits to calculate the variable cost as well as fixed costs. The high low method is used for the missed costs to calculate the proportion of variable cost and the fixed cost in the mixed cost.
	
	Number of patients visits
	Clinic costs
	June
	7620
	914400
	Oct
	5325
	825375
	Difference
	2295
	89025
To calculate the variable cost:
(Total cost under high activity – Total cost under low activity) / (High activity – Low activity)
= (914400 – 825375) / (7620 – 5325) 
= 89025 / 2295
= $38.79
Fixed cost = Total cost – (Number of visits * variable cost)
= 914400 – (7620*38.79)
= 618813.73
Calculate the contribution margin, the contribution margin ratio, and the per-visit revenue, costs, and operating income.
Contribution margin = Total revenue – variable cost
= 14550400 – (38.79*79573)
= 14550400 – 3086704
= 11463696
Contribution margin ratio = Contribution margin / Total revenue
= 11463696 / 14550400
= 78.79%
Per visit revenue = Total revenue / Total visits
=14550400 / 79573
= 182.86
Per visit cost = Total cost / Total visits
= 11052981 / 79573
= 138.90
Per visit operating income = (Total revenue – Total cost) / Number of visits
= (14550400 – 11052981) / 79573
= 3497419 / 79573
= 43.95
Discuss the importance of computation of the contribution margin in evaluating the relationship of cost, volume, and profit.
Contribution margin can be said as the revenue of the product deducting the variable cost. As per Knight, Contribution margin is the leftover revenue after deducting the variable cost of the product from the revenue of the product.

Health Care Services Reimbursement In 2013, the Gastroenterology Clinic of Pearland Medical Center had revenue totaling $14,550,400. The Gastroenterology Clinic costs data for a 12-month period from...

Health Care Services Reimbursement

Solution

Answer To This Question Is Available To Download

Related Questions & Answers

Submit New Assignment

Month, 2013	Number of Patient Visits	Gastroenterology Clinic Costs, $
January	6,755	945,700
February	6,620	946,660
March	5,834	880,934
April	6,228	927,972
May	7,554	944,250
June	7,620	914,400
July	7,136	949,088
August	7,440	959,760
September	6,453	942,138
October	5,325	825,375
November	5,588	854,964
December	7,020	961,740