Finance and Accounting

Finance and Accounting

Calculating the Break-Even Point/Should $1000 be Investigated?

Required Resources
Course Text:
Cleverly, W., Song, P., & Cleverley, J. (2011). Essentials of health care finance (7th ed.). New
York: Jones & Bartlett
Required Text
1. Read from the text, Essentials of health care finance:
o Chapter 14: Cost Concepts and Decision Making
? This chapter discusses ways to classify cost and the four major categories of cost. Five general types of cost behavior, three methods of cost allocation along with break even calculation are also examined.
o Chapter 15: Product Costing
? This chapter discusses the existing needs for cost information in healthcare firms and ho cost information relates to three key activities of management. Three main phases of costing process and the two systems necessary to accurately cost healthcare encounters of care are also examined.
o Chapter 17: Cost Variance Analysis
? This chapter focuses on cost control concepts including two major theories used for cost control. Cost variance analysis and how that is used by management are examined.

1. Calculating the Break-Even Point

Review Assignment 7 in Chapter 14 and, answer the following questions:

o What is the role provided by break-even point and how would you calculate this point?
o Please calculate break-even point in patient days under the provided contract.
o What are the limitations of using break-even point and how would you incorporate this point with management strategic planning?

 

2. Should $1000 be Investigated?

Review Assignment 7 in Chapter 17 and, answer the following questions:

o What is the difference between favorable and unfavorable variances and how do you calculate them?
o What if $1,000 difference is unfavorable and should that be investigated?
o What if $1,000 difference is favorable and should that be investigated?
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