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Homework answers / question archive / Week 8 Assignment 1) A clinic has $1 million in revenues and $950,000 in costs

Week 8 Assignment 1) A clinic has $1 million in revenues and $950,000 in costs

Accounting

Week 8 Assignment

1) A clinic has $1 million in revenues and $950,000 in costs. What is its operating margin?

2) The owners of the clinic in Exercise 11.1 invested $400,000. What is the return on investment? Is it adequate?

3) A laboratory has $4.2 million in revenues and $3.85 million in costs. What is its operating margin?

4) The owners of the laboratory in Exercise 11.3 invested $6 million. What is the return on investment?

5) A not-for-profit hospital realizes a 3 percent return on its $200,000 investment in its home health unit. Its current revenue after discounts and allowances is $382,000. Administrative costs are $119,000, clinical personnel costs are $210,000, and supply costs are $47,000. Providing home health care is not a core goal of the hospital, and it will sell the home health unit if it cannot realize a return of at least 12 percent. A process improvement team has recommended significant changes to the home health unit’s billing processes. The team has concluded that these changes could reduce costs by $20,000 and increase revenues by $5,000. Analyze the data that follows and assess whether the changes would make the home health unit profitable enough to keep.

6) The table shows cost and revenue data for an outpatient surgery clinic. Calculate the clinic’s marginal cost, marginal revenue, and profits at each level of output. Which price maximizes its profits?

7)The price–quantity relationship has been estimated for a new prostate cancer blood test: Q = 4,000 − (20 × P). Use a spreadsheet to calculate the quantity demanded and total spending for prices ranging from $200 to $0, using $50 increments. For each $50 drop in price, calculate the change in revenue, the change in volume, and the additional revenue per unit. (Call the additional revenue per unit marginal revenue.)

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