Reference no: EM131011057

Question:

Please provide references

You must explain the importance of cost accounting to the CEO. But before you do that you also must explain how costs are classified, allocated, and assembled.

Answer the following:

a. Explain managerial accounting and why it is important to the health services manager.

b. Explain financial accounting and why it is important to the health services manager.

c. Identify ONE method of assembling costs and provide an example of how you would approach this.

d. Identify ONE method of classifying costs, describe and provide an example.

e. Explain the differences between fixed costs, semi-fixed costs, and variable costs?

f. What cost structure is best when a provider is capitated? Explain.

g. What cost structure is best when a provider is reimbursed mostly by fee for service? Explain.

You are considering starting a walk-in clinic. Your financial projections for the first year of operations are as follows:

Revenues (10,000 visits)	$400,000
Wages and benefits	220,000
Rent	5,000
Depreciation	30,000
Utilities	2,500
Medical supplies	50,000
Administrative supplies	10,000

Assume that all costs are fixed, except supply costs, which are variable.

Furthermore, assume that the clinic must pay taxes at a 30 percent rate.

a. Construct the clinic's projected P&L statement.

b. What number of visits is required to break even?

c. What number of visits is required to provide you with an after-tax profit of $100,000?