Accounting 561, Cost Accounting

Your organization (City Rehab) has been approached by an MCO looking for an exclusive arrangement for the rehabilitation
of its hip replacement patients. The MCO is aggressively positioning itself to compete in the growing Medicare managed care segment.
They have offered to guarantee 1000 patient visits per year and want to pay $70 per visit. City Rehab currently receives $95 per visit directly from Medicare. City Rehab provides 1,500 hip replacement visits per year and has the capacity to handle 500 more easily without adding any staff or equipment. The fixed costs associated with hip replacement rehab are $7,500 and the variable costs are $67 per visit.
a. What is City’s current average cost per hip replacement visit?
b. Should you take the MCO’s offer? If so, why? If not, why not?


Posted Date: 9/11/2012 2:27:05 PM | Location : United States







Related Discussions:- Accounting 561, Assignment Help, Ask Question on Accounting 561, Get Answer, Expert's Help, Accounting 561 Discussions

Write discussion on Accounting 561
Your posts are moderated
Related Questions

what are the purposes of cost accounting information

You are required to conduct a detailed analysis of all the prime cost and overhead variances. You must create a fictitious company (and a fictitious cost object) which has at least

Sensitivity Analysis The only certain thing is that nothing is sure thing. Cost structures can be anticipated to vary over the time period. Management should vigilantly analyze

describe the procedures involved in payroll labour cost accounting

A co has a standard costing system. the following are avaiable for september: actual quantity of direct materials purchased and used: 20,000 pounds Standard price of direct mater

GZ Inc. manufactures two products that require both machine processing and labor operations. Although there is unlimited demand for both products, GZ could devote all its capacitie

The state legislature has voted to develop a grant-in-aid policy to try and induce local communities to devote more resources to improving their infrastructure. Town O = Has a


A company manufactures two products, Product A manufactured in Process Y and Product B manufactured in Process Z. The following information is available for a period: