Reference no: EM132757188

Question: Outpatient Surgery is developing an RVU and product cost for the following surgical procedures, given the projected volumes and sample direct costs. Projected total costs for the Outpatient Surgery department are $20 million ($12 million in direct costs and $8 million in indirect costs). Use the steps provided in your textbook to Calculate the cost per procedure using job-order costing.

Procedure Projected Volumes Labor Expense Supply Expense

Subcutaneous Tissue Debridement 2,000 $100 $90

Esophagastroduodeno with Biopsy 4,000 $150 $60

Aspiration/Injection of a Joint 8,000 $75 $30

Colonoscopy 10,400 $110 $ 20

Stage 1: Calculate the RVU for each procedure (Show your work):

Stage 2: Calculate the total cost for each procedure (Show your work):

Next, Outpatient Surgery wants to add a cost driver to better represent the causal relationship of their indirect costs to produce a more accurate cost-per-procedure. Using the steps in your textbook assign costs to each procedure using the following information.

Procedure Equipment Use (min.)

Subcutaneous Tissue Debridement 10

Esophagastroduodeno with Biopsy 30

Aspiration/Injection of a Joint 5

Colonoscopy 15

Stage 1: Calculate the direct RVU and the cost driver for each procedure (Show your work):

Stage 2: Calculate the total cost for each procedure (Show your work):

Lastly, Outpatient Surgery is considering adding a new cataract surgery procedure with a fixed cost of $200,000, a charge of $130 per procedure, and a variable cost of $90.

What is the breakeven point in quantity and in dollars? (Show your work)

What is the contribution margin in dollars and in a percentage? (Show your work)