Monday
April 21, 2014

Homework Help: Differential Cost Analysis

Posted by Danny on Friday, July 4, 2008 at 3:27pm.

The Mountain View Senior Adult Program (MVSAP) is interested in starting a visiting nurse program. The program would use licensed practical nurses to make home visits once a week to full-pay clients in the community. The MVSAP will treat the visiting nurse program as a profit center. If the visiting nurse program is successful and profitable, the profits will be used to expand the program to partial pay and no-pay clients during the second year of operation. The executive director is not sure how best to implement the program. She has two major alternatives. The first alternative is to hire a small number of nurses and make them full-time employees. The second alternative is to contract with several nurses who would be interested in working part-time. To help in thinking through this financial management decision situation, the executive director decides to compute a series of BEPs based on contracting for the service and based on hiring one, two, and three full-time nurses. The executive director makes the following assumptions about the new visiting nurse program:
„X The price of the service will be set at $65 per visit.
„X One full-time nurse position can provide a maximum of 120 one-hour visits per month.
„X If the service is contracted, the agency plans to pay the contract nurses at the rate of $45 per visit including the cost of supplies.
„X If the agency hires the nurses, the monthly salary will be $4,000 and the agency plans on spending an average of $10 per client per visit for supplies.
„X Regardless of the method of service delivery (direct or contract) and regardless of the number of nurses hired, the agency plans to charge (allocate) $4,000 per month in indirect costs to the visiting nurse program.
Compute four annualized BEPs assuming the following: (1) the service is contracted, (2) one full-time nurse is hired, (3) two full-time nurses are hired, and (4) three full-time nurses are hired. What are the four BEPs? Why do these BEPs differ? Are all of these BEPs feasible solutions? If you were the executive director of the Mountain View Senior Adult Program, what method of service delivery (direct or contract) would you use? Why?

Answer this Question

First Name:
School Subject:
Answer:

Related Questions

accounting - The Mountain View Senior Adult Program (MVSAP) is interested in ...
math - Using Table 8.21, allocate the indirect costs in the indirect cost pool ...
WISE Program??? - What is the WISE program??? i saw this in my program studies ...
Programming and Design - Draw the hierarchy chart and design the logic for a ...
Proctology - Hi, I am an 11th grade student beginning to look into some college ...
English - 1. The comic drama is uninformative because it doesn't deal with ...
Early Child Ed. - Which one would be the best answer? Would (A) be the best ...
Web Design and Development - Explain how an affiliate program works as both an ...
statistics - the average number of years a person takes to complete a graduate ...
Programming - Write a program that would calculate and display the results for ...

Search
Members