Reference no: EM132157220
Refer to Sombertown Hospital’s financial statements below for calculating the ratios requested in Questions 1-5.
Sombertown Hospital
Statement of Operations
For the Year Ended December 31, 2018
Revenues, Gains, Other Support
Net patient service revenue $ 4,500,000
Other revenue 600,000
Total Revenue 5,100,000
Expenses
Nursing Services 3,600,000
Administrative Services 600,000
Depreciation 300,000
Other Expenses 150,000
Total Expenses 4,650,000
Operating Income 450,000
Investment Income 150,000
Excess of revenues over expenses 600,000
Increase in Unrestricted Net Assets$ 600,000
Sombertown Hospital
Balance Sheet
As of December 31, 2018 (2017 omitted)
Assets
Current Assets
Cash and cash equivalents $ 150,000
Net patient receivables 1,050,000
Total Current Assets 1,200,000
Properties and Equipment
Gross properties and equipment $ 2,700,000
Less accumulated depreciation 1,425,000
Net Properties and Equipment 1,275,000
Total Assets $ 2,475,000
Liabilities and Net Assets
Current Liabilities
Accounts Payable 600,000
Salaries Payable 150,000
Total Current Liabilities 750,000
Notes Payable 600,000
Unrestricted Net Assets 1,125,000
Total Liabilities and Net Assets$ 2,475,000
1. What is Megatropolis Hospital’s operating margin?
2. What is Megatropolis Hospital’s days in accounts receivable?
3. What is Megatropolis Hospital’s long-term debt to net assets ratio?
4. What is Megatropolis Hospital’s age of plant?
5. What is Megatropolis Hospital’s days of cash on hand?
6. What are the four phases of management control?
7. Management has studied work patterns in the housekeeping department and estimates the number of hours to be worked as follows. Hours worked = (1,600 hours per month) + (0.50 × RVUs). For the coming month, management expects RVUs to be 6,000. What should budgeted labor for the month be?
8. Last year the price for thermometer covers in a pediatrician’s office was $.06 each. This year, the covers cost $.08 each. If the office purchased 20,000 thermometer covers this year, what is the price variance?