...A Financial Breakdown Of Hospital Supply Inc This case is comprised of various situations that deal with behavioral costs in order to maximize profits. The use of break-even analysis and opportunity cost is used along with recognizing and using the fixed and variable cost. The Hospital Supply, Inc. case is where they manufacture hydraulic hoists and have a normal volume of 3,000 units per month. Using a break-even analysis the determination of the sales volume and prices will reveal what the company will need to profitably sell its product. There are also scenarios given to determine which options to take to maximize profit or at least minimize loss. Exhibit 1 displays the cost per unit for hydraulic hoists and will provide the information needed to determine how Hospital Supply Inc. can maximize its profit in the following various scenarios. Part one is to determine both the break-even volume in units and in sales dollars. First we need to add all the variable costs per unit = $550 + $825 + $420 + $275 = $ 2,070 and fixed costs per unit = $660 + $770 = $1,430. Given information within the problem include: Normal volume = 3,000 units Regular selling price = $4,350 To find total fixed cost = 3,000 units *$1,430/unit = $4,290,000 By taking the regular selling price and subtract the variable cost per unit gives the unit contribution: = price/unit – variable cost/unit = $4,350 - $2,070 = $2,280 Contribution percent = $2,280/$4,350 = 0.524138 - Break-even...
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...a dialysis treatment. There are two types of patients, the hemodialysis patients (HD) and the peritoneal dialysis patients (PD). The HD-patients need more intensive monitoring. They visit the hospital three times a week where their blood is cleansed with a specialized dialyzer machine. Alternatively PD-patients are treated at home (once a week) via easier techniques that use standard supplies. This treatment is monitored by staff-visits of ‘Dialysis Assistance Inc.’. The following information is available with regard to these treatments. TOT HD PD Treatments 12.000 8.000 4.000 Direct Costs (supplies) $860.000 $550.000 $310.000 General overhead $1.170.000 ? ? Currently there is a discussion going on about cost allocation. Using the number of treatments as allocation base is one option that most hospitals tend to use. Some hospitals use the direct cost base as an allocation base for overhead. Nevertheless, the alternative is a more detailed analysis of overhead: The general overhead for these treatments consists of two activities namely (1) nursing services (with skilled A-level and lower skilled B-level staff) and (2) specialized dialyzes machine activity. Full-time equivalents and the % of machine usage are potential allocation bases. Following data is available for analysis: Nursing: $810.000 wage cost $600.000 for A level and $210.000 for B-level Staff for HD treatment: 5 A-level staff (full-time) 1 B-level (full time) Staff for PD treatment: No A-Level...
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...I. PROBLEM City Hospital Supplies, Inc. is faced with the means to develop the Philippine market for the three product lines of Sneider Company for its startup operations. II. SWOT ANALYSIS STRENGTHS • Limited liability of owners The shareholders are not personally liable for corporate acts and debts. This means that in case of liquidation of the company, if the company's assets are insufficient to meet the liability, nothing is required to be contributed by the owners. Only the owners' contribution is at stake rather than their personal assets. • Raising capital is easy as approved by stockholders The company’s form of business organization, corporation, makes possible the raising of large amounts of money from large number of persons. As for City Hospital Supplies, Inc., four other friends of the incorporators would be invited to put in token investments in the firm. • Exclusive distributorship agreement with Sneider Company The company had just been awarded the exclusive distributorship in the Philippines for the Sneider line of hospital supplies by the Regional Marketing Director for Asia of the Sneider Company based in West Germany. An agreement followed after months of negotiations. This is an advantage over other companies in the Philippines. • Good pricing strategy Positioning the Sneider lines about 15-20% lower than the competition would help capture a major share of local market. • Location...
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...Patton-Fuller Community Hospital IT Department Patton-Fuller Community Hospital (PFCH) has capacity to accommodate more than 600 patients at time. They have more than 600-beds. Due to raising health care costs this community hospital is also being affected, but on the other hand they have to maintain the quality health care services. Due to the seriousness of the latest economic recession, U.S. dollars of investment have been the organizations "slow." Therefore, it is necessary to reconsider the existing staff of PFCH business model, and consider the transformation of them, to enable them to compete in today's economic climate. Current Business System The Facilities Department's proposed, emergency room remodeling will include the use of environmentally friendly materials. In an effort to reduce waste, all e-mails will be water marked "Please consider the environment before printing this e-mail." This is an important piece in the hospital ERP system and implementation of reasons to reduce paperwork. The Fund's policies and procedures outlined manually equipment tracking asset inventory, including risk assessment, use of equipment, employee training in the use, equipment maintenance agreement, compliance. The various hospital departments are individually responsible for the procurement of equipment, training, and all electrical and mechanical equipment maintenance costs for their area. Chief compliance officer, Frederick Adair, monitors personal...
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...AUGUSTINE MEDICAL, INC. CASE ANALYSIS THE BAIR HUGGER PATIENT WARMING SYSTEM I. Factual Summary: * The United States does not currently have an established warm-air technology blanket market. * The Bair Hugger Patient Warming System product is not a consumer device. The main users of this product consist of businesses and hospitals. * Hospitals will always be provided funding necessary to prevent hypothermia and other diseases; as a result a demand will consistently be common. * Augustine Medical, Inc. is using a push strategy. They are relying on distributors to push their products on to their prospective buyers. * Approximately there are 5,500 hospitals that have operating rooms and postoperative recovery rooms. * The target market for the product is hospitals with seven or more recovery room beds. The target market makes up 80% of all surgical operations in the United States (26,155 recovery beds). * It was stated that there are 21,000,000 surgical operations per year in the United States which 60 to 80 percent of these become hypothermic. Thus, on an average, 14,700,000 patients (21,000,000*70%) suffer from postoperative hypothermia. * The firm projected that one system would be sold for every eight postoperative recovery room beds. According to the firm’s research, the market could allow around of 3,269 heater/blower units to be sold (26,155 recovery beds/8). * By subcontracting the heater/blower unit, the company drastically...
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...Case Analysis Sun Medical Systems, INC Table of Contents Summary 2 1. Situation Analysis 2 2. Problem Analysis 3 3. Decision Analysis 5 A. Maintain Status-quo 6 B. Move to a different department or organization 6 C. Verify her stories and then decide the next course of action 6 Plan of Action 7 A. Prepare for the crucial Conversation 7 Summary The objective of the case analysis to apply the SA-PA-DA-PA (Situation Analysis, Problem Analysis, Decision Analysis and Plan of Action) framework to find out the right course of action for Shabana Jabeen of Sun Medical systems. Shabana feels frustrated and stagnated at her job in spite of her division doing exceptionally well and her contributions to the growth of the division are widely acknowledged by the Management. The case analysis has been structured in 4 sections as per the SA-PA-DA-PA methodology. Situation Analysis Situation analysis is defined as a process that examines a situation, its elements, and their relations, and that is intended to provide and maintain a state of situation awareness for the decision maker. A situation analysis defines and interprets the state of the environment of a person or organization and provides the context and knowledge for planning. Examining Shabana’s situation we come across the following facts – I. Shabana has been a top student and an exceptional...
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...Business Process Analysis and Improvement, we study tools and cases that allow us to analyze, improve and design internal firm activities. In the second part, Supply Chain Management, we turn our attention to entities external to the firm and examine the activities of sourcing raw materials and delivering goods to consumers. The components are detailed below: Part I: Business Process Analysis and Improvement. We begin our study of business processes by first playing the “Lego” game. Through this exercise, we will have an overview of a simple assembly line as well as the fundamental concepts in process management, such as capacity, bottleneck, etc. Then, we study how to analyze the operational process using the case “Kristen´s Cookie Company” and further evaluate the financial value of operational improvement. In the following sessions, we will introduce Toyota production system as well as it implication in service context. We will also study the tools of quality management. We finally study the operations strategy and the product-process matrix using “Shouldice” case. Part II: Supply Chain Management: In this part, we turn our attention to the interfaces between an organization and its external environment, more specifically, to the management of relationships with partners and customers. We begin with the newsvendor model, a key tool which helps capture the trade-offs in matching supply with demand. Then, we study the coordination among supply chain partners using...
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...management department is typically responsible for directing the supply chain. Material management is an umbrella department that has many other functions (e.g., central store, laundry and linen operations, and sterile processing). The core purpose of material management is to direct and control the movements of goods in an efficient manner through a hospital system (Langabeer, 2008). This material management proposal document will elaborate on the role materials management plays within a hospital and the role of operations managers in this process. This document will further identify possible constraints a hospital may experience in its supply chain, the potential effects and justification on implementing a new collaborative planning process, and provide suggestions on how to manage a hospital supplied during a disaster. Role of Materials and Operations Management The role of materials and operations management plays within a hospital system is vital to the success of any health care organization. According to Langabeer (2008) material management controls significant resources and have total expenditures, or spending at 50% of a hospital budget. Materials management not only directs and controls the supply chain of a health care organization it is responsible for managing the flow of goods throughout the hospital and carry out supply and resource logistics. Materials management has numerous meanings and some hospitals view material management as an umbrella department with various...
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...HBSP Product Number TCG 5 rP os t THE CRIMSON PRESS CURRICULUM CENTER THE CRIMSON GROUP, INC. Lakeside Hospital A hospital just can’t afford to operate a department at 50 percent capacity. If we average 20 dialysis patients, it costs us $425 per treatment, and we’re only paid $250. If a department can’t cover its costs, including a fair share of overhead, it isn’t self-sufficient and I don’t think we should carry it. op yo Peter Lawrence, M.D., Director of Specialty Services at Lakeside Hospital, was addressing James Newell, M.D., Chief Nephrologist of Lakeside’s Renal Division, concerning a change in Medicare’s payment policies for hemodialysis treatments. Recently, Medicare had begun paying independent dialysis clinics for standard dialysis treatments, and the change in policy had caused patient volume in Lakeside’s dialysis unit to decrease to about 50 percent of capacity, producing a corresponding increase in per-treatment costs. By February of the current fiscal year, Dr. Lawrence and Lakeside’s Medical Director were considering closing the hospital’s dialysis unit. Dr. Newell, who had been Chief Nephrologist since he’d helped establish the unit, was opposed to closing it. Although he was impressed by the quality of care that independent centers offered, he was convinced that Lakeside’s unit was necessary for providing back-up and emergency services for the outpatient centers, as well as for treatment for some of the hospital’s seriously ill inpatients. Furthermore...
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..., the program service ratio, defined as the fraction of total expenses committed to advancing the charitable mission of the organization, and the fundraising ratio, defined as the ratio of fundraising expenses to donations revenue). Nonprofit managers have an incentive to over-report the expenses classified as program services and under-report the expenses classified as administrative and fundraising in order to improve these ratios. We examine whether nonprofits respond to these incentives, and we find evidence consistent with opportunistic cost shifting to improve the program service and fundraising ratios. Additional analysis finds that smaller nonprofits that are more reliant on donations revenue manipulate their operating ratios to a greater extent. JEL classification: M4; L3 Key words: Nonprofit organizations, earnings management, disclosure, hospitals. ______________________________________________________________________________ *Corresponding author. Tel.: (319) 335-0841; fax (319) ; email: robert_yetman@uiowa.edu 1 We thank Ashiq Ali, Ramji Balakrishnan, Leslie Eldenburg, Lil Mills, Shiva Sivaramakrishnan, and workshop participants at the University of Arizona and Texas A&M University for their helpful comments. 1. Introduction This...
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...GSM5301 Accounting for Decision Making GROUP ASSIGNMENT (CASE 16-1 HOSPITAL SUPPLY, INC) Question 1 What is the break-even volume in units? In sales dollars? Solution 1 Variable costs per unit = $550 + $825 + $420 + $275 = $2,070 Fixed costs per unit = $660 + $770 = $1,430 Normal volume = 3,000 units Regular selling price = $4,350 Total fixed cost = 3,000 units x $1,430/unit = $4,290,000 Unit contribution = price/unit – variable cost/unit = $4,350 - $2,070 = $2,280 Contribution percent = $2,280/$4,350 = 0.524 Break-even volume in units = fixed cost / unit contribution = $4,290,000 / $2,280 = 1,882 units Break-even volume in sales = fixed cost / contribution percent = $4,290,000 / $0.524 = $8,184,867 Question 2 Market research estimates that monthly volume could increase to 3,500 units, which is well within hoist production capacity limitations, if the price were cut from $4,350 to $ 3,850 per unit. Assuming the cost behavior patterns implied by the data in Exhibit 1 are correct, would you recommend that this action be taken? What would be the impact on monthly sales, costs and income? Solution 2 Regular price With price reduction Difference Quantity (Q) 3,000 3,500 500 Price (P) 4,350 3,850 -500 Revenue $ (P x Q) 13,050,000 13,475,000 425,000 Fixed costs (FC) 4,290,000 4,290,000 0 Variable costs (VC) 6,210,000 7,245,000 1,035,000 Total costs (FC+VC) 10,500,000 11,535,000 Income...
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...Case Analysis - Owens and Minor, Inc. 1.1) What are the services rendered by the distributor to manufacturers and hospitals? Owens and Minor Inc. is a dominant distribution company that distributes medical and surgical supplies to hospitals, integrated health care systems and group purchasing organizations. It takes on the financial risk of owning and managing inventory for customers. It tracks and verifies their customer’s prices. In addition, O&M supplies customer usage and sales numbers, market trends, buying patterns and product penetration to manufacturers. 1.2) How has the nature of distribution changed over time? In the mid1980s hospitals joined together to gain more control of supply costs. They began carrying less inventories and demand more services from distributors without paying more, which led to the consolidations of distributors as well. Customers wanted the distributors to package the products in smaller units and shipped them directly to nursing and surgical units. They also placed smaller orders more frequently. This new trend shifted some of inventory related costs to distributors. Companies like O&M had a hard time find a way to price these new complex services for each individual account. They underpriced services and some customers such as those with stockless system were unprofitable for the companies. 1.3) How is O&M different from other distributors? O&M decided to focus solely on distributing medical and surgical supplies while many...
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...Pharmaceutical Supply Chain Abstract • The global pharmaceutical supply chain is very complex and critical to a $650 billion dollar value industry which ensures the world population has necessary medicines. • Manufacturers have the responsibility to produce sufficient quantities of drugs to meet a growing global demand while maintaining quality to ensure safety. • Global and local regulatory agencies around the world have a daunting task to monitor manufacturers, raw material suppliers, and stem counterfeit pharmaceutical production. • Wholesale distributors, importers, and retail pharmacies have a large amount of power in the supply chain as they pull the demand from the manufacturers and provide the medicines to end-consumers. • In a changing industry where there are fewer blockbuster drugs and increasing use of generic offerings, manufacturers as well as participants at all levels of the supply chain must look for areas to improve efficiencies to be profitable in the long-run. Pharmaceutical Supply Chain Analysis 2 Introduction A transparent and efficient pharmaceutical supply chain contributes significantly towards improving the availability of essential medications. The reality across the world is that pharmaceutical supply and distribution consists of different stakeholders from both the public and private sectors to create complex systems. In a heavily regulated field, globalization has placed increasing demands on regulatory agencies to ensure the safety and...
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...Lakeside Hospital A hospital just can’t afford to operate a department at 50 percent capacity. If we average 20 dialysis pa- tients, it costs us $425 per treatment, and we’re only paid $250. If a department can’t cover its costs, includ- ing a fair share of overhead, it isn’t self-sufficient and I don’t think we should carry it. Peter Lawrence, M.D., Director of Specialty Services at Lakeside Hospital, was addressing James Newell, M.D., Chief Nephrologist of Lakeside’s Renal Division, concerning a change in Medicare’s payment policies for hemodialysis treatments. Recently, Medicare had begun paying independent dialysis clinics for standard dialysis treatments, and the change in policy had caused patient volume in Lakeside’s dialysis unit to decrease to about 50 percent of capacity, producing a corresponding increase in per-treatment costs. By February of the current fiscal year, Dr. Lawrence and Lakeside’s Medical Director were considering closing the hospital’s dialysis unit. Dr. Newell, who had been Chief Nephrologist since he’d helped establish the unit, was op- posed to closing it. Although he was impressed by the quality of care that independent centers of- fered, he was convinced that Lakeside’s unit was necessary for providing back-up and emergency services for the outpatient centers, as well as for treatment for some of the hospital’s seriously ill inpatients. Furthermore, although the unit could not achieve the low costs of the independent cen- ters, he disagreed...
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...Intro: Virtual Organization is the measure for providing practice and functions of work in a corporation. This provides the view and functions of a corporation’s website and the interior sections for employees’ website. This provides students the ability to be aware of the sections of a corporation’s functions with or before the work experience. The education in this provides the viewpoints necessary for organization and maintaining a corporate world. This manual provides the different sections of different work environments for corporations. This is a measure of providing a learning experience. Those that are new to the work concept will learn the basis of the corporation from the Virtual Organization. This is a functional level of experience by a virtual corporation. However, these are not actually correct in the information they provide. They are decided and engineered forms of a corporation’s websites with outer and internal functions. This assists with the education of a company’s work provided by its virtual websites. Towards the ending of the manual are the measures necessary to follow for attaining the Virtual Organization website. The key factors of login, materials, and selection for Virtual organization explained toward the end of the manual with brief pictures for view. The last paragraphs of the manual will provide a conclusion of the functions and guidance for the student’s future use of the Virtual Organization website. ...
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