Scribd Logo
Upload

Welcome to Scribd!

  • 23 views

    Costing Analysis PDF

    Uploaded by

    sherif
    The document analyzes the costs associated with a home health care laboratory. It finds that variable costs are $5 per test and fixed costs total $65,000 per month. As capacity utilization increases from 30% to 90%, average costs decrease from $9.33 to $6.4 per test and profit margins increase from 37.8% to 57.3%. The breakeven point is 6,500 tests, which fully covers the fixed costs. At full 100% capacity, the average cost is $6.3 per test and profit margin is 58%. Direct costs include variable medical supplies and doctor/nurse fees, while fixed costs include salaries, equipment, and facilities. Indirect costs encompass marketing,

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    Costing Analysis PDF

    Uploaded by

    sherif
    23 views4 pages
    The document analyzes the costs associated with a home health care laboratory. It finds that variable costs are $5 per test and fixed costs total $65,000 per month. As capacity utilization increases from 30% to 90%, average costs decrease from $9.33 to $6.4 per test and profit margins increase from 37.8% to 57.3%. The breakeven point is 6,500 tests, which fully covers the fixed costs. At full 100% capacity, the average cost is $6.3 per test and profit margin is 58%. Direct costs include variable medical supplies and doctor/nurse fees, while fixed costs include salaries, equipment, and facilities. Indirect costs encompass marketing,

    Original Title

    Costing analysis.pdf

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    The document analyzes the costs associated with a home health care laboratory. It finds that variable costs are $5 per test and fixed costs total $65,000 per month. As capacity utilization increases from 30% to 90%, average costs decrease from $9.33 to $6.4 per test and profit margins increase from 37.8% to 57.3%. The breakeven point is 6,500 tests, which fully covers the fixed costs. At full 100% capacity, the average cost is $6.3 per test and profit margin is 58%. Direct costs include variable medical supplies and doctor/nurse fees, while fixed costs include salaries, equipment, and facilities. Indirect costs encompass marketing,

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    23 views4 pages

    Costing Analysis PDF

    Uploaded by

    sherif
    The document analyzes the costs associated with a home health care laboratory. It finds that variable costs are $5 per test and fixed costs total $65,000 per month. As capacity utilization increases from 30% to 90%, average costs decrease from $9.33 to $6.4 per test and profit margins increase from 37.8% to 57.3%. The breakeven point is 6,500 tests, which fully covers the fixed costs. At full 100% capacity, the average cost is $6.3 per test and profit margin is 58%. Direct costs include variable medical supplies and doctor/nurse fees, while fixed costs include salaries, equipment, and facilities. Indirect costs encompass marketing,

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    You are on page 1of 4

    Costing analysis

    SHERIF BASHER AUC ID#600220861


    Variable Cost Pattern
    Variable cost of laboratory
    Test is $5 per unit
    Number of tests processed Variable cost/unit $ Total variable cost
    and delivered
    15000 $5 $75000
    25000 $5 $125000
    45000 $5 $225000

    Fixed Cost Pattern

    The equipment cost is $20,000 per month with a maximum monthly capacity of 50,000 units,
    Salaries Cost is $ 30,000 per month, monthly rent is $10,000, other monthly overheads $ 5,000
    Fixed cost= $20000+$30000+$10000+$5000=$65000

    Number of tests processed $ Monthly Fixed Costs $ Average cost per unit
    and delivered
    15000 $65000 $4.33
    25000 $65000 $2.6
    45000 $65000 $1.44

    Total Cost Pattern

    Number of tests $VC/unit $ Total FC $ FC/unit $ Total


    processed and cost/unit
    delivered
    15000 $5 $65000 $4.33 $9.33
    25000 $5 $65000 $2.6 $7.6
    45000 $5 $65000 $1.44 $6.4
    Effect capacity utilization on profit and profit margin:

    Number of Capacity Operating profit


    tests utilization in $ Total $Price $Operating margin%
    processed percentage% cost/unit /unite profit/unite
    and
    delivered

    15000 30% $9.33 $15 $5.67 37.8%


    25000 50% $7.6 $15 $7.4 49.3%
    45000 90% $6.4 $15 $8.6 57.3%

    The higher the capacity utilization will decrease the average cost of unite the higher the profit and
    profit margin with good pricing.

    Breakeven Quantity:
    It means that the number of tests (unite) could cover all fixed cost.
    BEQ=fixed cost/price per unit-variable cost per unit (unite contribution).
    =65000/10=6500 tests (unite)
    Number of Capacity $ Total $Price /unite $Operating Operating
    tests utilization in cost/unit profit/unite profit
    processed percentage% margin%
    and
    delivered
    6500 %13 $15 $15 $0 %0

    *Every test (unite) give (1unie contribution) to cover part of fixed cost.
    *It means that we need 6500 tests (unite) with unite contribution $10 to cover all fixed cost
    ($56000).
    *after breakeven quantity each test (unite) is done will add 1 unite contribution ($10) to profit.

    Number of Capacity $ Total $Price /unite $Operating Operating


    tests utilization in cost/unit profit/unite profit
    processed percentage% margin%
    and
    delivered
    50000 %100 $6.3 15 $8.7 58%
    With full capacity utilization (100%) we will get 58% operating profit margin.
    Cost object :( home health care)

    Direct cost Indirect cost


    Variable cost Fixed cost Variable cost Fixed cost

    *marketing and
    *medical *salaries and wages selling department * General and
    supplier(consumables) of doctors ,nurses expenses. administrative
    ,lab and radiology (G&A) expenses
    *doctors’ fees for technicians (salary- *fuel of consist of the
    some services. based) transportations. company’s non-
    medical staff
    *nurses fees (volume- *equipment Costs.
    based) depreciation.
    *HR department
    expenses.

    *finance department
    expenses.

    *depreciation
    expenses.

    *supportive services
    as transportation
    (drivers).

    *salaries of own call


    center.

    *licensing
    (amortization)

    You might also like