Assignment: Expense Forecasting Scenario

Assignment: Expense Forecasting Scenario

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Expense Forecasting Scenario

Your department has performed 20,000 procedures during the first six months (January–June) of 20X1. Spending during that period of time was $210,000 for fixed expense items and $1,200,000 for variable expense items. Of those amounts, $50,000 of fixed expense money was spent on preparing for a Joint Commission survey. Volume is anticipated to be 10% higher in the second half of the year. On November 1st, two new procedure technicians will begin work. The salary and fringe benefit costs for each are $96,000/year. Based on the information provided, prepare an expense forecast for 20X1.

Annualization for Fixed: (Adjusted Total for Year to Date Expense/6) * 12 =Total Annualized Amounts

Annualization for Variable (Adjusted Total for Year to Date Expense/ 20,000) * 40,000 =Total Annualized Amounts.
Financial Analysis Cycle

MARGINAL PROFIT AND LOSS STATEMENT SCENARIO
You are examining a proposal for a new business opportunity – a new procedure for which demand is expected to be 1,400 units the first year, growing by 600 units a year thereafter. The price charged per procedure is $1,000. The collection rate is anticipated to be 80%. Each procedure consumes $300 of supplies. Salary cost is estimated to cost $540,000 each year, fringe benefits are 25% of salaries, rent for the facility is $55,000/yr and operating cost are $120,000/yr.

Questions:

Develop a marginal profit and loss statement for this business opportunity.Based on that analysis, should this opportunity be pursued?
BREAK-EVEN ANALYSIS SCENARIO
You can charge $1,075 for a new service. Demand is anticipated to be 8,000 units a year. Your business is able to handle up to 16,500 units annually, so capacity should not be a problem. The average collection rate is 80%. The new service has annual fixed costs of $4,700,000. Variable cost per unit of service is $420.

Question: Use break-even analysis to determine if this new service is financially viable. If the business is not financially viable, what steps could you take to make a case to proceed with implementation? Explain your decision.

BENEFIT/COST RATIO ANALYSIS SCENARIO
You are considering the acquisition of a new piece of equipment with a useful life of five years. This new technology will make your clinical operation more efficient and allow for a reduction of 10 FTEs. The equipment purchase price is $4,500,000 plus 10% installation fee. The purchase price includes service for the first year, an item that has an annual cost of $10,000. There is a potential for additional volume of 150,000 units in the first year, growing by 30,000 each year thereafter. The price charged per unit is $15.00 with a 50% collection rate. The staff being eliminated are paid $12.50 per hour. The fringe benefits rate is 20%. The hurdle rate is 7.5%.

Questions: After reviewing Dr. Ward’s Video and the calculations below, please answer the following questions:

What is meant by benefit/cost ratio, average payback period and ROI and why are the all important to understand when purchasing new equipment?
Based on this information, would you pursue this opportunity?
Explain your decision in 250-500 words in the text box below
This Assignment will be due. Be sure and include all of your calculations and formulas.
Please post your narrative response under the Cost/Benefit tab in the Week 10 Application Assignment Template provided in the Week 9 Learning Resources.
I HAVE ATTACHED A 4 MIN VIDEO ALSO

You must proofread your paper. But do not strictly rely on your computer’s spell-checker and grammar-checker; failure to do so indicates a lack of effort on your part and you can expect your grade to suffer accordingly. Papers with numerous misspelled words and grammatical mistakes will be penalized. Read over your paper – in silence and then aloud – before handing it in and make corrections as necessary. Often it is advantageous to have a friend proofread your paper for obvious errors. Handwritten corrections are preferable to uncorrected mistakes.

Use a standard 10 to 12 point (10 to 12 characters per inch) typeface. Smaller or compressed type and papers with small margins or single-spacing are hard to read. It is better to let your essay run over the recommended number of pages than to try to compress it into fewer pages.

Likewise, large type, large margins, large indentations, triple-spacing, increased leading (space between lines), increased kerning (space between letters), and any other such attempts at “padding” to increase the length of a paper are unacceptable, wasteful of trees, and will not fool your professor.

The paper must be neatly formatted, double-spaced with a one-inch margin on the top, bottom, and sides of each page. When submitting hard copy, be sure to use white paper and print out using dark ink. If it is hard to read your essay, it will also be hard to follow your argument.

ADDITIONAL INSTRUCTIONS FOR THE CLASS

Discussion Questions (DQ)

Initial responses to the DQ should address all components of the questions asked, include a minimum of one scholarly source, and be at least 250 words.
Successful responses are substantive (i.e., add something new to the discussion, engage others in the discussion, well-developed idea) and include at least one scholarly source.
One or two sentence responses, simple statements of agreement or “good post,” and responses that are off-topic will not count as substantive. Substantive responses should be at least 150 words.
I encourage you to incorporate the readings from the week (as applicable) into your responses.
Weekly Participation

Your initial responses to the mandatory DQ do not count toward participation and are graded separately.
In addition to the DQ responses, you must post at least one reply to peers (or me) on three separate days, for a total of three replies.
Participation posts do not require a scholarly source/citation (unless you cite someone else’s work).
Part of your weekly participation includes viewing the weekly announcement and attesting to watching it in the comments. These announcements are made to ensure you understand everything that is due during the week.
APA Format and Writing Quality

Familiarize yourself with APA format and practice using it correctly. It is used for most writing assignments for your degree. Visit the Writing Center in the Student Success Center, under the Resources tab in LoudCloud for APA paper templates, citation examples, tips, etc. Points will be deducted for poor use of APA format or absence of APA format (if required).
Cite all sources of information! When in doubt, cite the source. Paraphrasing also requires a citation.
I highly recommend using the APA Publication Manual, 6th edition.
Use of Direct Quotes

I discourage overutilization of direct quotes in DQs and assignments at the Masters’ level and deduct points accordingly.
As Masters’ level students, it is important that you be able to critically analyze and interpret information from journal articles and other resources. Simply restating someone else’s words does not demonstrate an understanding of the content or critical analysis of the content.
It is best to paraphrase content and cite your source.

LopesWrite Policy

For assignments that need to be submitted to LopesWrite, please be sure you have received your report and Similarity Index (SI) percentage BEFORE you do a “final submit” to me.
Once you have received your report, please review it. This report will show you grammatical, punctuation, and spelling errors that can easily be fixed. Take the extra few minutes to review instead of getting counted off for these mistakes.
Review your similarities. Did you forget to cite something? Did you not paraphrase well enough? Is your paper made up of someone else’s thoughts more than your own?
Visit the Writing Center in the Student Success Center, under the Resources tab in LoudCloud for tips on improving your paper and SI score.
Late Policy

The university’s policy on late assignments is 10% penalty PER DAY LATE. This also applies to late DQ replies.
Please communicate with me if you anticipate having to submit an assignment late. I am happy to be flexible, with advance notice. We may be able to work out an extension based on extenuating circumstances.
If you do not communicate with me before submitting an assignment late, the GCU late policy will be in effect.
I do not accept assignments that are two or more weeks late unless we have worked out an extension.
As per policy, no assignments are accepted after the last day of class. Any assignment submitted after midnight on the last day of class will not be accepted for grading.
Communication

Communication is so very important. There are multiple ways to communicate with me:
Questions to Instructor Forum: This is a great place to ask course content or assignment questions. If you have a question, there is a good chance one of your peers does as well. This is a public forum for the class.
Individual Forum: This is a private forum to ask me questions or send me messages. This will be checked at least once every 24 hours.