Outpatient Surgery is developing an RVU and product cost for the following surgical procedures, given the projected
Question:
Outpatient Surgery is developing an RVU and product cost for the following surgical procedures, given the projected volumes and samples direct costs. Projected total costs for the Outpatient Surgery department are $20 million ($12 million in direct costs and $8 million in indirect costs). Use the steps provided in your textbook to Calculate the cost per procedure using job-order costing.
Procedure | Projected Volumes | Labor Expense | Supply Expense |
Subcutaneous Tissue Debridement | 2,000 | $100 | $90 |
Esophagastroduodeno with Biopsy | 4,000 | $150 | $60 |
Aspiration/Injection of a Joint | 8,000 | $75 | $30 |
Colonoscopy | 10,400 | $110 | $20 |
Stage 1: Calculate the RVU for each procedure (Show your work):
Stage 2: Calculate the total cost for each procedure (Show your work):
Next, Outpatient Surgery wants to add a cost driver to better represent the causal relationship of their indirect costs to produce a more accurate cost-per-procedure. Using the steps in your textbook assign costs to each procedure using the following information.
Procedure | Equipment Use (min.) |
Subcutaneous Tissue Debridement | 10 |
Esophagastroduodeno with Biopsy | 30 |
Aspiration/Injection of a Joint | 5 |
Colonoscopy | 15 |
Stage 1: Calculate the direct RVU and the cost driver for each procedure :
Stage 2: Calculate the total cost for each procedure:
Lastly, Outpatient Surgery is considering adding a new cataract surgery procedure with a fixed cost of $200,000, a charge of $130 per procedure, and a variable cost of $90.
What is the breakeven point in quantity and in dollars?
What is the contribution margin in dollars and in a percentage?
Accounting Business Reporting for Decision Making
ISBN: 9780730302414
4th edition
Authors: Jacqueline Birt, Keryn Chalmers, Albie Brooks, Suzanne Byrne, Judy Oliver