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Healthcare, Coursework

Healthcare Calculations

Healthcare Calculations

a) TVC

TVC=VCR×V

  1. Volume = 10,000 procedures

TVC = $15×10,000

= $150,000

  1. Volume=12,500 procedures

TVC = $15×12,500

= $187,500

  1. Volume=15,000 procedures

TVC = $15×15,000

= $225,000

b) TC

TC=TVC+FC

  1. Volume = 10,000 procedures

TC = $750,000 + $150,000

=$900,000

  1. Volume =12,500 procedures

TC = $750,000 + $187,500

= $937,500

  1. Volume =15,000 procedures

TC = $750,000 + $225,000

= $975,000

c). AVC

AVC= TC/V

  • Volume = 10,000 procedures

AVC = $(900,000/10,000)

= $90

  • Volume=12,500 procedures

AVC = $(937,500/12,500)

= $75

  • Volume = 15,000 procedures

AVC = $(975,000/15,000)

= $65

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Question 

Use the information below to find the a) Total Variable Costs, b) The Total Costs, and c) the Average Costs for each volume given below.

Healthcare Calculations

Healthcare Calculations

Fixed costs = $750,000

Variable cost per procedure = $15

1) Volume = 10,000 procedures

2) Volume = 12,500 procedures

3) Volume = 15,000 procedures.

You must show your work, or you will not receive credit for this question. You can either type your response, attach a pic of your work, or complete it in MS Word or Excel and attach it.

VCR – Variable Cost Rate (what it costs for one test, visit, unit, etc.).

TC – Total Costs

UCS – Underlying Cost Structure

FC – Fixed Costs

TVC – Total Variable Costs (all variable costs. Not just one, as in the Variable Cost Rate (VCR)

AC – Average Cost

V – Volume

FORMULAS

To calculate the following, please use the formulas below. Remember, every problem you encounter in Chapter 4 can be found using the procedures below. For example, suppose you are given Total Variable Costs (TVC) but not the Variable Cost Rate (VCR). In that case, you can find the Variable Cost Rate (VCR) using the Total Variable Costs (TVC) formula below. Remember that you will always have all the necessary information, so reference this formula sheet for the problems given. 

VCR = TVC/V

TC = FC + TVC

FC = Same as Total Fixed Costs. Add all Fixed Costs to arrive at FC (if necessary).

TVC = VCR x V

AC = TC/V