Reference no: EM133176030
Health Services Resource Management Assignment
Important information: You must show all calculations and explain how you got all your answers. For example, suppose a question asks what the profit will be in a month and you put "$50,000". Even if this is correct you will receive no marks if you do not show your detailed calculations.
There is no need for footnotes or references unless you quote from a reference/secondary source. It is essential that the work is your own work.
Question 1
The following items relate to your hospital for the financial years 2019 and 2020:
|
2020 ($)
|
2019 ($)
|
|
Accumulated depreciation on PPE
|
20,000,000
|
12,000,000
|
|
Accounting fees
|
20,000
|
7,500
|
|
Audit fees
|
6,000
|
5,500
|
|
Bad and doubtful debts
|
200
|
100
|
|
Capital purpose income
|
600,000
|
400,000
|
|
Car park revenue
|
50,000
|
45,000
|
|
Cash & cash equivalents
|
5,000,000
|
2,000,000
|
|
Depreciation& amortisation
|
800,000
|
560,000
|
|
Domestic services
|
150,000
|
100,000
|
|
Drug expenses
|
20,000
|
55,000
|
|
Food expenses
|
700,000
|
600,000
|
|
Fuel, light, power and water
|
200,000
|
110,000
|
|
Government grants
|
4,000,000
|
2,000,000
|
|
Insurance costs
|
8,000
|
7,500
|
|
Interest and dividends
|
80,000
|
30,000
|
|
Inventories (drugs)
|
4,000,000
|
3,250,000
|
|
Lease expenses
|
150,000
|
99,000
|
|
Long-term loans
|
20,000,000
|
10,000,000
|
|
Long-term receivables
|
60,000,000
|
55,550,000
|
|
Maintenance contracts
|
35,000
|
22,500
|
|
Medical expenses
|
90,000
|
88,000
|
|
Motor vehicle expenses
|
55,000
|
38,000
|
|
Motor vehicles
|
400,000
|
300,000
|
|
Non-salary labour costs
|
40,000
|
35,000
|
|
Other administrative expenses
|
428,000
|
750,000
|
|
Other current assets
|
1,000,000
|
$578,000
|
|
Other current labilities
|
3,000,000
|
1,500,000
|
|
Other revenue
|
850,000
|
500,000
|
|
Patient fees revenue
|
5,500,000
|
4,280,000
|
|
Patient transport expenses
|
1,000
|
800
|
|
Private practice fee revenue
|
300,000
|
450,000
|
|
Property, Plant & Equipment (PPE)
|
100,000,000
|
78,000,000
|
|
Repairs and maintenance
|
65,250
|
22,500
|
|
Salary and wages
|
8,000,000
|
6,028,000
|
|
Short-term payables
|
600,000
|
200,000
|
|
Short-term receivables
|
3,500,000
|
1,520,000
|
|
Short term staff benefits
|
2,500,000
|
1,850,000
|
|
State government grants
|
100,000
|
66,800
|
|
Superannuation
|
400,000
|
389,000
|
|
Total equity
Workcover insurance
|
127,800,000
105,000
|
115,648,000
88,200
|
Cash flow information
|
2020 ($)
|
2019 ($)
|
|
Capital Grants from Government
|
120,000
|
200,000
|
|
Cash at beginning of period
|
1,127,000
|
(253,000)
|
|
Cash at end of period
Donations and Bequests Received
|
5,000,000
25,000
|
2,000,000
18,000
|
|
Employee Expenses Paid
|
6,000,000
|
4,500,000
|
|
GST Received from ATO
|
5,000
|
2,000
|
|
Interest Received
|
95,000
|
55,000
|
|
Non-salary Labour Costs
|
22,000
|
12,000
|
|
Operating Grants from Government
|
4,000,000
|
2,500,000
|
|
Other Capital Receipts
|
50,000
|
10,000
|
|
Other Receipts
|
800,000
|
560,000
|
|
Patient and Resident Fees Received
|
8,000,000
|
6,000,000
|
|
Payments for Non-Financial Assets
|
300,000
|
60,000
|
|
Payments for Supplies & Consumables
|
3,000,000
|
2,800,000
|
|
Proceeds from sale of Non-Financial Assets
|
100,000
|
280,000
|
Required:
Q1. Prepare a balance sheet, income statement and cash flow statement for 2019 and 2020 (arrange the statements like the financial statements of Barwon Health 2018/19 where the statements for the two years are side-by- side).
Q2. Provide a brief summary of your hospitals overall financial performance. In your summary, discuss whether it is profitable and financially sustainable, and liquid (i.e. does it have enough cash inflows to cover cash outflows and debts as they fall due?).
QUESTION 2
The following transactions relate to your hospital:
• May 1: Paid rent for the month of May $4,000.
• May 1: Paid insurance for June, July and August, $3,000.
• May 2: Patients received health services of $20,000, paid cash on same day.
• May 6: Patients received health services of $80,000 on terms of net 30 days.
• May 8: Purchased medical supplies to be used in Mayand paid on the same day,$20,000.
• May 15: Patients paid $5,000 for health services received on May 6.
• May 30:Paid $20,000 for salaries for work in May.
• June 1:Paid rent for the months of June and July$8,000.
• June 1: Patients paid $15,000 for health services received on May 6.
• June 2: Purchasedmedical supplies for $100,000 on terms of net 30 days. $50,000 of the supplies will be used in June, and the other $50,000 in July.
• June 5: Patients paid $60,000 for health services received on May 6.
• June 10: Patients received health services of $100,000 on terms of net 30 days.
• June 15: Phone bill received $500 for telephone services in May.
• June 30: Paid $25,000 for salaries for work done in June.
• June 30: Patients paid $30,000 for health services received on June 10.
• June 30: Paid phone bill received on June 15.
Required:
Q1. Calculate the profit/loss for each month on a cash accounting and accrual accounting basis (prepare a separate profit and loss statement for each month and show your calculations).
Q2. Which month was the most profitable for your hospital? Explain your answer by specifically referring to the method (cash or accrual) you would adopt to evaluate the profitable month.
Q3. Calculate your hospital's profit or loss for the two months ending June on both a cash accounting and accrual accounting basis. If you get the same answer for both methods explain why this is the case. If you get a different answer for the cash and accrual methods, explain the causes of it.
Q4. Why are the profit/loss figures different under each method? Which method would you prefer to use for planning and decision-making in your hospital and why?
Question 3
You forecasted the following consultations (in units) for your medical clinic as below:
|
December 2019
January 2020
February 2020
March 2020
|
15,000
10,000
12,000
18,000
|
• The average fee for medical consultations is $40.
• 80% of consultation fees are collected in the month they occur, 10% in the following month and 10% in the second month following the consultation.
• Fixed expenses for your medical clinic are $45,000 per quarter and this includes $5,000 depreciation expense.
• Variable consultation expenses are $10 per consultation.
• Your medical clinic has a bank loan incurring interest of $10,000 per quarter and must be paid at the end of each quarter.
• All other expenses are paid in the quarter in which they are incurred.
• Monthly staff salaries are $10,000 and are paid in the month they are due.
• As at 1 January 2020, there was $100,000 in your clinic's bank account.
Required
Q1. Prepare a consultations budget for the quarter (i.e. show the number of consultations and the expected revenue for these months).
Q2. Prepare a cash collections schedule for the quarter.
Q3. Prepare a cash budget for the quarter. Will your clinic need to borrow money during this period? If so, how much and in which month?
Q4. Prepare a budgeted profit and loss statement for the quarter.
Question 4
You are considering setting up a new paediatric departmentin your hospital, focussing on giving adviceto children about their diets. If you do set up this department, you will give each child patient a Disney diet diary costing $10 a diary, and a fruit soft toy costing $2 each. Each child will have yearly consultations and you will charge $30 for each consultation. You will need to hire a paediatrician who will be paid $4,000 a month. Other fixed costs for the department will be $2,000 per month.You budget20,000 patients for this year and set your budget based on this number of patients.
After the end of the year, you generated the following actual results:
|
Actual Results
(10,000 patients)
|
|
Revenue
Variable costs:
Disney diary
Fruit soft toy
Total variable costs:
Fixed costs:
Paediatrician
Other fixed costs
Total fixed costs
Operating profit:
|
$350,000
$140,000
$30,000
$170,000
$6,000
$8,000
$14,000
$166,000
|
Required:
Q1. Prepare a budget variance report and identify the main favourable and unfavourable variances.
Q2. What could be the causes of these variances, and how will these possible causes influence your budget planning for next year?