Budget and Finance

4235/1225 = 3.45; 365/3.45 = 106 days

The days' receivables is calculated as the revenue divided by the accounts receivable. This figure must be converted into days by dividing it into 365. The figure then must be rounded up, because partial days shouldn't be counted.

Other scenario has revenues of 200 and receivables of 27. The days receivable in this case would be 50 days (49.3 days).

The operating margin for April is (6325-1250) / 6325 = 80.2%

For May, the operating margin is (4875-785) / 4875 = 83.9%

The operating margin is the operating profit divided by revenue. The operating profit is the revenue minus expenses. In another example, if revenue is 200 and expenses are 110, the operating margin would be 45%.

The breakeven point is 500 patients. This is calculated as:

1250-750 = 500

Then 250,000 / 500 = 500

The fixed costs must be covered by the amount left over once the variable costs have been deducted from revenue. Thus, in this case revenue is 1250 and variable costs are 750, so the contribution is 500. This contribution to fixed costs is the same for every customer. Thus, the breakeven point is 250,000 / 500 = 500 customers.

In another example, if the price is 200 and the variable costs are 110, and the fixed costs are 100,000, then the breakeven point is 1112 customers. The breakeven point is always rounded up because to have less than that the company would not yet have broken even. By rounding up, the company has officially passed the breakeven point.

4. The relative value scales are 150, 300, 568.75, 264 and 160 for a total of 1442.75

The relative value scales indicate how much effort goes into each type of acuity. The cost per RVU is relative to the total nursing costs, so it is a weighted-average:

$36,389 for Acuity Level 1

$72,777 for Acuity Level 2

$137,974 for Acuity Level 3

$64,044 for Acuity Level 4

$38,814 for Acuity Level 5

If the relative value scales were 1.10, 1.55, 1.80, 2.45 and 3.15 and the days were 10, 20, 30, 25, 15, the RVU total would be 11 + 31 + 54 + 61.25 + 47.25 = 204.5

The total nursing costs for each acuity level, given a total cost of $200,000, are as follows:

$10,758 for Acuity Level 1

$30,318 for Acuity Level 2

$52,812 for Acuity Level 3

$59,902 for Acuity Level 4

$46,210 for Acuity Level 5

5.

Volume

Fixed

Variable

Total

Average

375000

525000

375000

825000

375000

1125000

375000

1275000

The original example has fixed of $500,000 and variable of 250 per patient. Under this example, the average costs under different scenarios are as follows:

Volume

Fixed

Variable

Total

Average