In this assignment you are asked to determine how much ClearEye's pre-tax profit would change if the
Question:
In this assignment you are asked to determine how much ClearEye's pre-tax profit would change if the increased patient yield (increase of patients having their operations at ClearEyes from 5,283 to 6,669) were accomplished. ?
You will need to become familiar with Exhibit 5, Revenues and Expenses, of the ClearEyes Case. You will be asked to develop a new Revenues and Expenses chart based on the following changes to revenue and costs: ?
a). Revenue will increase because of the increase in the number of procedures. Net revenue per procedure remains the same at $1,338.b). Direct Variable Costs will increase based on the increased number of procedures. Direct Variable Cost per procedure remains at $480 per procedurec). Wages will remain the same except for the following:1). Surgeon. A new part-time surgeon (30%) has been hired. The cost per case for the new surgeon will be the same as currently being paid to Dr. Zincola, $83.37. Dr. Zincola and the part-time surgeon will preform 5,997 operations (6,669 - 672 (to be performed by Dr. Connors)).2). Management decided to hire one additional techniciand). Benefits will increase based on increased labor costs (multiply total labor costs by 28%)e). Other Costs will remain the same except for the following1. These three items will increase proportionately with patient volume (26.2351%):a) Cleaning and maintenanceb) Legalc) Miscellaneous2. Depreciation. This item equals the current amount + 15% x (new equipment charge of 11,000 (chairs) + 1 surgical room for 93,000)
1). Please complete the financial matrix comparing the revenues and expenses of the current and higher yield and upload the document here. Use the information included in the Quiz Instructions above to make the appropriate changes in revenue and costs for the higher yield. Enter the change and the % change between the current and higher yield.
2). Enter the change in Revenue that would occur with the increased patient yield. HINT: Look at the Revenues row, Change column.
3). Enter the change in Direct Variable Costs between the current and higher yield. HINT: Look at the Direct Variable Cost per procedure row, Change column.
4). Enter the change in Total Wages (excluding benefits) between the current and higher yield. HINT: Look at the Subtotal Wages row, Change column.
5). Enter the change in benefits between the current and higher yield. HINT: Look at the Benefits row, Change column.
6). Enter the change in Other Costs between the current and higher yield. HINT: Look at the Sub-total (Other Costs row, Change column.
7). Bottom Line: By how much would ClearEyes' pre-tax income increase if staff were able to increase the number of patients having their operations to 6669?
8). By what percent would ClearEye's pre-tax income increase if staff were able to increase the number of patients having their operations to 6669??
Expert Answer:
5283 6669 1386 26235 Particulars Per Procedure Current Yeild Higher Yield Change age Change Revenues ... View the full answer
