Part One

Describe the four types of costs:

Fixed \sVariable
Part II of Semivariable Semifixed

Dynamic Medical Suppliers, Inc. made $300,000 in sales during the fiscal year 2010. It has a total variable cost of $107,700.

Determine whether the contribution margin ratio generates a profit or a loss for the organization.

Section III

Determine the number of full-time employees required to cover multiple shifts based on the following scenario:

Health care is a critical field, and some organizations require staff members to be present at all times to ensure that there is enough staff to care for the patients. A medical center with both inpatient and outpatient units, for example, will require staff to be present after normal business hours to care for those admitted to the inpatient unit. It is also critical to ensure that there is enough staff to care for the number of patients being treated. This is critical for managers to know when it comes to calculating the costs of salary and benefits. If a company overschedules its employees, it can have a negative impact on revenue because the staff-to-patient ratio is not appropriate.

You plan the nursing schedule for the pediatric intensive-care unit. Your daily staffing consists of six registered nurses (RNs) working eight hours per day and two licensed practical nurses (LPNs) working three hours per day. Calculate the number of work hours required for a single day.

Section IV

Understanding financial ratios can aid a health care organization’s credit analysis. Financial ratios should be compared to other types of financial data within the organization. Financial ratios are calculated using values from the balance sheet, income statement, and statement of cash flows.

Ratios can be classified as follows:

Liquidity ratios indicate whether a health care organization is able to meet its financial obligations.
Are there any assets or cash on hand to pay the bills?
Solvency ratios indicate whether a company has the resources to meet its long-term obligations.
How liquid is the agency?
Profitability ratios indicate whether operating revenue exceeds operating expenses.
How well does the medical center manage its assets and expenses?
Calculate ratios using the data/information provided below.

To calculate the requested financial ratios, use the financial reports listed below. Provide a brief (1–2 sentence) explanation of the ratio’s outcome.

Balance Sheet for Dominion Plus Surgery Center December 31, 200XX

Dominion Plus Surgery CenterRevenue and Expense StatementYear Ending 12/31/20XX

Section V

Determine the organization’s break-even point using the information provided in Part II.

Dynamic Medical Suppliers, Inc. made $375,000 in sales during the fiscal year 2010. The total variable costs are $63,730.

Section VI

Identify actions that the organization’s management team can take to help the organization reach its break-even point using the information provided in Parts II and V.

The organization can work hard to ensure that there is more revenue coming in than going out. This was there as a gain rather than a loss. It is the responsibility of management to keep current sales up to date through monitoring and reporting. If a decline is observed throughout the year, management should meet with leadership and staff to discuss the changes that must be implemented in order to increase sales while avoiding losses.