Assume your clinic practice has the expenses outline in the Expense Grid table (fixed, semi-variable or variable) . You have been asked to perform an analysis of cost savings opportunities. In addition to understanding whether the costs are fixed, semi-variable or variable, you have been asked to determine whether costs should be classified as direct or indirect. Explain how you will classify the costs and give a rationale from the literature to support your classification method.

EXPENSE GRID (fixed, semi-variable or variable)

EXPENSE	COST CLASSIFICATION
Rent for office paid quarterly under annual lease agreement.
Utilities - paid monthly	XXXXXXXXXXXXXXXX
Electric (includes air-conditioning)
Gas heat and hot water
Water and sewage
Salaries and wages	XXXXXXXXXXXXXXXX
Administrative staff retained under annual employment contract
Professional clinical practice staff retained under annual employment contract
Per diem clinical professional staff retained under per diem rate agreement
Secretarial and security staff retained under monthly employment agreement
Janitorial staff retained under monthly contract
Technology	XXXXXXXXXXXXXXXX
Electronic medical records system annual lease agreement with monthly terms
Imaging equipment lease to own agreement with annual terms that includes maintenance agreement but not supplies.
Telephone/communications system annual lease agreement that includes maintenance.
Minor patient care equipment leased on an annual basis as part of medical office lease agreement.Does not include maintenance or supplies.
Office computer equipment including printers/fax/scanning.
Supplies	XXXXXXXXXXXXXXXX
Major supplies - cost threshold $500.00 per itemor more
Minor supplies - cost threshold <$500.00 per item
Security/Fire Systems leased on a monthly basis with volume adjustment
Remote communications and answering services leased on a monthly basis with volume adjustment.
Malpractice expenses annual premiums based on number and type of professional staff
Property and general liability insurance annual premium based on number of employees and square footage of premises.
Professional services contracts excluding clinical staff	XXXXXXXXXXXXXXXX
Legal services paid on monthly retainer no volume adjustment
Accounting services paid on monthly retainer no volume adjustment
Computer maintenance paid on monthly retainer base rate plus volume adjustment

Answer rating: 100% (QA)

To classify the costs and determine whether they should be classified as direct or indirect as well as fixed semivariable or variable we need to consi... View the full answer