Community General Hospital has enjoyed a history of success in attracting and maintaining solid patient volumes. Part
Question:
The total dollars expend on equipment purchases for the last four years are as follows
2011 $3,500,000
2012 4,200,000
2013 4,050,000
2014 4,150,000
It is estimated by management that the amount of money to be spent on capital equipment in 2015 will be $ 4,550,000.
A tentative list of requested equipment is presented in Exhibit A. Based on what you have read and studied about capital budgeting:
- How did the hospital management set the allotted dollars to be spent on capital equipment in this budget year at $ 4,550,000 and
- What process would be followed and completed in selecting the items to be purchased in the 2015 capital budget?
- What analysis might be used and how would this work.
- What discussions would management utilize to make specific equipment purchase decisions?
- Explain the rationale behind each equipment purchase.
COMMUNITY GENERAL HOSPITAL
EXHIBIT A
Type of Equipment Cost
1. Nuclear Medicine Camera $ 325,000
2. MRI 1,500,000
3. Computer System Laboratory 285,000
4. Patient Information System 585,000
5. Pharmacy Distribution System 387,000
6. Clinical Information System Nursing 867,000
7. New Loading Dock – Materials Management 248,000
8. Air Conditioning – West Wing 489,000
9. Hospital Beds - 30 45,000
10. Echocardiogram Equipment 450,000
11. IV Pumps – 40 55,000
12. Communications Equipment 355,000
13. Chemical Analyzer – Laboratory 988,000
14. Transportation Vans – Food Service 75,000
15. Transport Containers – Food Service 45,000
16. Information Systems Equipment (Computers) 278,000
17. Operating Room Tables & Equipment 765,000
18. Contingency Spending 350,000
Total $ 8,365,000
International Marketing And Export Management
ISBN: 9781292016924
8th Edition
Authors: Gerald Albaum , Alexander Josiassen , Edwin Duerr