Overview of problem set

I have been working through this problem and one of the online tutors already looked at this and has helped me work through the answer. Attached is their methodology, the actual question and a thorough solution to the problem on excel. It is a relevant costing question regarding an investment at the hospital. I would like someone just to relook at the problem and explain why in year 2 the personnel costs rise up from 59,000 in year 1 to 63,720 in year 2 and back to 59,000 in year three through to 5 (when the question stipulates that personnel costs have only risen by 8% "in the last few years" - ie, irrelevant to the question as we are forward looking) and provide any advice as to their f... click for more

Opportunity cost

Hi there again, Just another question about the opportunity cost of the converted wing. Why wouldn't the opportunity cost of the converted wing be calculated at $120 x unutilised number of bed per day. For example, in the 'first column' of the spreadsheet the rate of utilisation is 40%. So in reality, we have 60% of beds (units) being un-utilised per day which would have been utilised if the wing was not converted, which would bring us to the following calculation: 60% x 8 units (beds) = 4.8 beds per day x 365 days per year = 1752 beds per year x $120 = $210,240. And for the second column, we would have an opportunity cost of: 40% x 8 units (beds) = 3.2 beds per day unutilised x 365... click for more

Relevant costing question

I have had this question reviewed by an online tutorial assistant and would like to have it checked over by somebody else. I believe that the answer is correct but would still like a second opinion to be sure. I appreciate all the help the OTA has given me so far but believe that it is always prudent to gain a second opinion. So if you have time, could you please review the answer and provide any reasoning why you opinion may differ from the one provided. I'll provide the question and the proposed solution. It is a differential margin question looking at the proposed addition to a department at the hospital. The topics we have studied so far have focused on incremental revenue and costing... click for more

Managment accounting - number of beds in a hospital

Hi there I think I discovered something in the wording of the question.... It states in the question that "one registered nurse earning $25,000 annually, and two licensed practical nurses, each earning $17,000 annually, will staff the 8-bed unit" So does this mean that each unit has 8 beds or not?? Because this will make the answer totally different.... This question is confusing me more and more... At the top of the question, there was 10 telemetry units on a 40-bed floor, which must of meant that we had 4-bed units.... thankyou

Costing Question

My lecture notes assert that not all expected future revenues and costs are relevant. It says that "expected revenues and costs that do not differ accross alternatives are irrelevant and hence can be eliminated from the analysis". In saying this, we can eliminate the opportunity cost of the revenue forgone from the medical-surgical patients of $120 x 8 x 365 cant we? I think you mentioned this before... How would I calculate the return on capital for say the first option ($80 charge per day @ 40% usage rate)? Im confused as we have a negative differential margin to start with.... I've attached the revised solution, taking away the opportunity cost for the medical-surgery opportunity c... click for more