5.1) The differences between fixed costs, semi –fixed costs and variable costs deal with the amount of series provided. Fixed costs are cost that remain the regardless of volume. Semi – fixed costs are costs that are fixed with in ranges that are smaller than the relevant range. Variable costs are cost that increase and decreases with volume.

5.2) The total cost are made up of two components which are variable costs and fixed costs.

5.3) a. The cost volume profit analysis is an analytical technique that is used to analyze the effects of changes in volume on revenue, costs and profit. It is also known as (CVP).
b. (CVP) is useful in health service managers because it helps keep a close watch on changes in the amount of revenues, costs and profits that goes on in the business in order to stay successful and competitive.

5.4) a. Contribution margin is the difference between unit price and the variable cost rate or per – unit revenue minus per –unit variable cost.
b. The economic meaning of contribution margin is the profit that is left after fixed costs is covered.

5.5) a. The break even equation is total revenues – total variable costs – fixed costs = profit.
b. The role that contribution margin play in the volume of the break even equation is the pre unit dollar amount available to first cover an business fixed costs and then to contribute to profits.

5.6) a. Operating leverage is the reflects the extent to which business costs are fixed.
b. Operation leverage are measured by the degree of leverage (DOL). This impact the utilization on profits.

5.7) When a provide moves from fee for service to discounted fee for service environment the element of capitated environment dramatically differs.

5.8 Capitated environment versus fee for service environment have a major different in profit analysis. Capitated provider takes on the insurance