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HSA 525- Health Financial Management Week 3: Homework Exercises 6-1 and 6-2 7-1 and 7-2
Assignment Exercise 61: Allocating Indirect Costs
Study Table 61 Table 62 and review the chapter text describing how the indirect cost is allocated. This assignment will change the allocation bases input for (A) Number of Visits (Volume) (B) Proportion of Direct Costs and (C) Number of Computers in Service.
Required 1. Compute the costs allocated to cost centers Clerical Salaries Administrative Salaries and Computer Services using the new allocation bases shown below. Use worksheet #1 that replicates the set up in Table 62. Total the new results. The new allocation bases are:
A = # Visits (Volume): PT = 9600/OT = 4000/ST = 2400/Total = 16000 (16000 $3.50 = $56000)
B = Proportion of Direct Costs: PT = 60%/OT = 25%/ST = 15%/Total = 100% (% $55000)
C = # Computers in Service: PT = 10/OT = 3/ST = 3/Total = 16 (16 $5000 each = $80000).
2. Using worksheet #2 that replicates the set up in Table 61 enter the new direct cost and the new totals for indirect costs resulting from your work. Total the new results.
Assignment Exercise 62: Responsibility Centers
Choose among the Case Study in Chapter 27 the clinic in Mini-Case Study 2 or the Metropolis Health System information as contained in its Case Study and the Appendix that contains its financial statements. Designate the responsibility centers and the support centers for the organization selected. Prepare a rationale for the structure you have designed.
Assignment Exercise 71: Analyzing Mixed Costs
The education coordinator decides that the community college packs may be unduly influencing the highlow computation. She decides to rerun the results omitting the community college volume.
Required
1. Using the monthly utilization information presented here and omitting the community college training packs find the fixed and variable portion of costs through the highlow method. Note that the college only acquires packs in three months of the year: January May and September. These dates coincide with the start dates of their semesters and summer school.
2. The reason the education coordinator needs to know how much of the cost is fixed is because she is supposed to collect the appropriate variable cost from the community college for their packs. For her purposes which computation do you believe is better? Why?
Month Total Number of Training Packs Total Cost Community College Number Packs Community College Cost January 1000 $6200 200 $1240 February 200 1820 March 250 2350 April 400 3440 May 700 4900 300 2100 June 300 2730 July 150 1470 August 100 1010 September 1100 7150 300 1950 October 300 2850 November 250 2300 December 100 1010
Assignment Exercise 72: Calculating the Contribution Margin
The Mental Health program for the Community Center has just completed its fiscal year end. The program director determines that his program has revenue for the year of $1210000. He believes his variable expense amounts to $205000 and he knows his fixed expense amounts to $1100000.
Required
1. Compute the contribution margin for the Community Center Mental Health Program.
2. What does the result tell you about the program?
Important Note: HSA 525 Health Care Finance e-book is needed for this assignment. Upon hand-shake I will email the link login/password to access e-book.

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