Course material: Neumann, B. R., Clement, J. P., and Cooper, J. C. Financial Management: Concepts and Applications for Health Care Organizations. Dubuque, IA: Kendall/Hunt Publishing Company, 1999, 239.

1. Where would you most likely find each of the following expenses listed: Administration, Physical Therapy, Nursing, or Maintenance?

a. The Administrator’s salary

b. Pharmacy supplies

c. Crutches

d. Fuel

e. Clerical office help

f. Office supplies

g. Physical therapy salaries

h. The salary for the Director of Nursing

i. RN wages

j. Snowplowing expenses

k. Staff education on how to use crutches with a patient

l. Health insurance for the clerical staff in the physical therapy department.

2. Identify each of the following as either direct costs or indirect costs?

a. Real estate taxes

b. Clinic telephone expense

c. Oil for the heat for the whole facility

d. Emergency room medical supplies

e. Liability insurance

f. Nursing wages for the operating room

g. Food for the residents in the medical surgical unit

h. Diapers for the babies in the nursery

i. Computer system for the facility

j. Marketing expense for the new wing

3. What is the contribution margin in the following example?

a. Revenues: $1,200,000

b. Variable Costs: $ 215,000

c. Fixed Costs: $1,000,000

What is the contribution margin percentage?

4. Explain, in your own words, the relative advantages and disadvantages of each of the three primary cost allocation methods (Direct Allocation, Step-Down Allocation, and Reciprocal Allocation).

5. Using the following example, allocate service center costs to each of the three revenue centers using the step-down method:
Full-time Costs Square Feet Meals Employees
Service Centers
Maintenance $150,000 —- 2,500 10
Dietary 400,000 10,000 —- 15 Administrative 600,000 20,000 2,500 10
Revenue Centers
Laboratory 600,000 30,000 2,500 20
Radiology 800,000 40,000 2,500 30
Nursing 2,000,000 100,000 30,000 50
$4,550,000 200,000 40,000 135

6. List three examples of Relative Value Units (RVUs) common to health care

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2. Do some research online of Greece’s recently resigned prime minister Alexis Tsipras, and specifically how his perspective on the country’s problems differed from that of Germany’s chancellor Angela Merkel.
3. Application: Who’s perspective are you more sympathetic with, Tsipras’ or Merkel’s, and who do you think will ultimately prevail? Do you think Greece will survive this crisis, or will it be forced to leave the euro zone? Do you favor Greece leaving the euro zone? Do you think the euro itself will survive in the long run, or has this crisis exposed its inherently fatal flaws? And what about the U.S., which is indebted at historic levels. Is the U.S. is heading for the same fate as Greece? What options do we have that Greece (as part of the euro zone) does not? Should the U.S. consider the options of defaulting on or “inflating away” its debt?

Business

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ANSWER BOTH QUESTION MAX 1 PAGE. ANSWER QUESTION ONE BY ONE

2. Do some research online of Greece’s recently resigned prime minister Alexis Tsipras, and specifically how his perspective on the country’s problems differed from that of Germany’s chancellor Angela Merkel.
3. Application: Who’s perspective are you more sympathetic with, Tsipras’ or Merkel’s, and who do you think will ultimately prevail? Do you think Greece will survive this crisis, or will it be forced to leave the euro zone? Do you favor Greece leaving the euro zone? Do you think the euro itself will survive in the long run, or has this crisis exposed its inherently fatal flaws? And what about the U.S., which is indebted at historic levels. Is the U.S. is heading for the same fate as Greece? What options do we have that Greece (as part of the euro zone) does not? Should the U.S. consider the options of defaulting on or “inflating away” its debt?