Assuming fixed costs (in total) have also remained constant for the last (3) year period, decide on which service(s) you would delete (if any) to increase profit margin (net income).Thoroughly Explain answer.

The question is in the Selection Line Deletion Tab

Cost Allocation Exercise Use the Direct Method Approach Projected Revenues by patient services department Routine care Laboratory Radiology Amount $ $ $ 24,000,000 15,000,000 14,000,000 $ 53,000,000 $ $ $ 18,000,000 8,000,000 7,000,000 $ 33,000,000 Financial Services Facilities Housekeeping Administration Human Resources $ $ $ $ $ 3,000,000 5,600,000 3,000,000 4,000,000 2,400,000 Totals Costs $ 18,000,000 Total Costs of both patient and support services $ 51,000,000 Projected Profit $ 2,000,000 Total Revenues Projected Costs for all departments: Patient Services Departments (Direct Cost) Routine care Laboratory Radiology Total Costs Support Services Department (Overhead Costs) Key Information Cost Drivers Unit Measure Financial Services Facilities Housekeeping Administration Personnel Patient Services Revenue Square Footage Labor Hours Salary Dollars Salary Dollars Patient Services Revenue Routine care Laboratory Radiology Total Square Ft Housekeeping Labor Hours Salary Dollars $ $ $ 24,000,000 15,000,000 14,000,000 185,000 25,000 55,000 72,000 4,200 8,000 $ 12,000,000 $ 3,000,000 $ 3,500,000 $ 53,000,000 265,000 84,200 $ 18,500,000 COMPLETE THE TABLE (Need to calculate allocation rate) Overhead Allocation Rates Cost Pool Financial Services Facilities Housekeeping Administration Human Resources $ 3,000,000 $ 5,600,000 $ 3,000,000 $ 4,000,000 $ 2,400,000 Cost Driver Total utilization Patient Services Revenue $ 53,000,000 Square Footage 265,000 Labor Hours 84,200 Salary Dollars $ 18,500,000 Salary Dollars $ 18,500,000 Allocation Rate 0.0566 21.132 35.629 0.216 0.130 Complere the Allocation Rate for each driver Please provide your ideas on other data points not listed in row 12 of this spreadsheet that could be used as cost drivers for each of the non-revenue generating depar List 2 for financial services, 1 for facilities, 1 for housekeeping, 2 for administration and 1 for HR he non-revenue generating departments listed. Question 18 COMPLETE TABLE (All bolded areas) 3 points Patient Services Department Support Department Financial Services Facilities Housekeeping Administration Human Resources Routine Care = = = = = $13,584,000 $3,909,420 $2,565,288 $2,592,000 $1,560,000 Total Indirect Costs = Direct cost = Total cost $24,000,000 $185,000 $72,000 $12,000,000 $12,000,000 Laboratory x x x x x 0.566 21.132 35.629 0.216 0.13 = = = = = $8,490,000 $528,300 $149,641.80 $648,000 $390,000 $24,210,708 = $10,205,942 $18,000,000 = $8,000,000 = $42,210,708 = $77,998,942 $15,000,000 $25,000 $4,200 $3,000,000 $3,000,000 What is the resulting profitability of each Department and the organization as a whole? x x x x x Radiology 0.566 21.132 35.629 0.216 0.13 = $18,205,942 $14,000,000.00 $55,000 $8,000 $3,500,000 $3,500,000 Totals Allocated x x x x x 0.566 21.132 35.629 0.216 0.13 = = = = = $7,924,000.00 $1,162,260 $285,032 $756,000 $455,000 = $10,582,292.00 = = $7,000,000 $17,582,292.00 $29,998,000 $5,599,980 $2,999,962 $3,996,000 $2,405,000 Service Line Deletion Assume each Departments individual Contribution Margins have been relative stable for the last 3 years at the le Sports Medicine Description in thousands $ Revenue Scranton Wilkes Barre Total Revenue Variable Costs Variable Expense Labor Disposable Equipment Disposable Supplies Total Variable Cost Contribution Margin Departmental Fixed Cost Allocated Overhead Cost Net Income/Loss $ Radiology Orthopedics 2,000 $ 3,000 5,000 $ 12,000 $ 15,000 27,000 $ 10,000 12,000 22,000 $ $ 4,500 $ 750 750 6,000 $ (1,000) $ 10,000 $ 1,000 2,000 13,000 $ 14,000 $ 10,000 1,500 3,000 14,500 7,500 $ $ $ 450 $ 275 $ (1,725) $ 10,000 $ 1,484 $ 2,516 $ 5,000 1,209 1,291 $ $ 1) Assuming fixed costs (in total) have also remained constant for the last (3) year period, decide on which servic 2) Based on your determination distribute Allocated Overhead based on each remaining departments % of total re Create a new Profit and Loss table for your results. 3) What other critical review needs to be considered before deleting a service line even though the contribution m stable for the last 3 years at the levels noted below Cardiology $ OBGYN Service Total 12,000 $ 14,000 26,000 $ 5,000 $ 6,000 11,000 $ 41,000 50,000 91,000 $ $ 12,000 $ 2,000 4,000 18,000 $ 8,000 $ 7,000 $ 1,000 3,000 11,000 $ - $ 43,500 6,250 12,750 62,500 28,500 $ $ $ 4,000 $ 1,429 $ 2,571 $ 450 $ 604 $ (1,054) $ 19,900 5,000 3,600 $ $ ear period, decide on which service(s) you would delete (if any) to increase profit margin (net income). Thoroughly Explain maining departments % of total remaining revenue and eliminated departments Fixed cost evenly to each remaining departme ne even though the contribution margin may be negative ome). Thoroughly Explain your answer. to each remaining department