Cost management, Project Management

Assignment Help:
Dr. Sherry Bird is employed by Dental Associates. Dental Associates recently installed a computerized job-order costing system to help monitor the cost of its services. Each patient is treated as a job and assigned a job number when he or she checks in with the receptionist. The receptionist-bookkeeper notes the time the patient enters the treatment area and when the patient leaves the area. This difference between the entry and exit times is the number of patient hours used and the direct labor time assigned to the dental assistant. (A dental assistant is constantly with the patient.) The direct labor time assigned to the dentist is 50 percent of the patient hours. (The dentist typically splits her time between two patients.)
The chart filled out by the dental assistant provides additional data that is entered into the computer. For example, the chart contains service codes that identify the nature of the treatment, such as whether the patient received a crown, a filling, or a root canal. The chart not only identifies the type of service but its level as well. For example, if a patient receives a filling, the dental assistant indicates (by a service-level code) whether the filling was one, two, three, or four surfaces. The service and service-level codes are used to determine the rate to be charged to the patient. The costs of providing different services and their levels also vary.
Costs assignable to a patient consist of materials, labor, and overhead. The types of materials used—and the quantity—are identified by the assistant and entered into the computer by the bookkeeper. Material prices are kept on file and accessed to provide the necessary cost information. Overhead is on the basis of patient hours. The rate used by Dental Associates is $20 per patient hour. Direct labor cost is also computed using patient hours and the wage rates of the direct laborers. Dr. Bird is paid an average of $36 per hour for her services. Dental assistants are paid an average of $6 per hour. Given the treatment time, the software program calculates and assigns the labor cost for the dentist and her assistant; overhead cost is also assigned using the treatment time and the overhead rate.
The overhead rate does not include a charge for any X-rays. The X-Ray Department is separate from dental services; X-rays are billed and costed separately. The cost of an X-ray is $3.50 per film; the patient is charged $5 per film. If cleaning services are required, cleaning labor costs $9 per patient hour.
Glen Johnson, a patient (Job 267), spent 30 minutes in the treatment area and had a two-surface filling. He received two Novocaine shots and used three ampules of amalgam. The cost of the shots was $1. The cost of the amalgam was $3. Other direct materials used are insignificant in amount and are included in the overhead rate. The rate charged to the patient for a two-surface filling is $45. One X-ray was taken.

Required:
1. Prepare a job-order cost sheet for Glen Johnson. What is the cost for providing a two-surface filling? What is the gross profit earned? Is the X-ray a direct cost of the service? Why are the X-rays costed separately from the overhead cost assignment?
2. Suppose that the patient time and associated patient charges are given for the following fillings:

1-Surface 2-Surface 3-Surface 4-Surface
Time 20 min 30 min 40 min 50 min
Charge $35 $45 $55 $65

Compute the cost for each filling and the gross profit for each type of filling. Assume that the cost of Novocaine is $1 for all fillings. Ampules of amalgam start at two and increase by one for each additional surface. Assume also that only one X-ray film is needed for all four cases. Does the increase in billing rate appear to be fair to the patient? Is it fair to the dental corporation?

Related Discussions:- Cost management

What is a trade-off in the context of a project?, Question: a) ‘Changes...

Question: a) ‘Changes in the competitive environment in which majority of organisations operate has necessitated a major rethink of the ways in which projects are managed'(Harv

Why do projects need planning, Q. Why do projects need planning? A basi...

Q. Why do projects need planning? A basic of managing projects is first to plan and then to accomplish. Obviously good project management is lots more complex as we shall see s

Project management cycle, It is essential that you study the list below to ...

It is essential that you study the list below to ensure that you understand the terminology used in assignment and examination questions. The successful outcome of your assessment

Explain how culture influences global product development, Question 1: ...

Question 1: (a) Critically evaluate joint venture and licensing as global market entry methods. (b) Explain and illustrate how a geocentric approach to global marketing i

Management of change, Problem 1: a) ‘Project Management is closely link...

Problem 1: a) ‘Project Management is closely linked with the management of change' Explain why. b) Elaborate on two models of change. Explain the relevance, applicability

Explain about term performance management systems, Explain about the term p...

Explain about the term performance management systems in brief. Performance management systems: Measurement processes of frequently assessing a projects progress in oppos

Elaborate the four possible choices in allocating the risk, QUESTION Ri...

QUESTION Risk is inherent to all projects. With increasing market competition, technology and globalisation, risk management is continuously gaining wider acceptance and import

Product/service and volume flexibility, Product/Service and Volume Flexibil...

Product/Service and Volume Flexibility Ability to respond fast to the customer's needs known as flexibility.Two forms of flexibility are product/ Service and volume flexibilit

What are the advantages of top-down centralised approaches, What are the ad...

What are the advantages of top-down centralised approaches? The advantages top-down centralised approaches Project budgets can be imposed by using top-down that is centralis

Briefly elaborate on the importance of a project charter, QUESTION (a) ...

QUESTION (a) Accurate estimation is crucial for effective planning and control and is associated with time, information, experience of estimator, techniques used and funding. D

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd