Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. for your consideration underlying cost structure a

for Your Consideration Underlying Cost Structure and Relevant Range In general, an organizations...

50.1K

Verified Solution

Question

Finance

for Your Consideration

Underlying Cost Structure and Relevant Range

In general, an organizations underlying cost structure is defined for a specified relevant range. For example, Atlanta Clinics underlying cost structure is given as follows:

Total costs = Fixed costs + Total variable costs

= $4,967,462 + ($28.18 x Number of visits),

and the relevant range for this structure is 65,000 to 85,000 visits.

Now, assume that a new payer makes a proposal to the clinic that would increase next years volume by 15,000 visits, which would increase the expected number of visits to 90,000. The financial staff presents you, the CEO, with an analysis of the proposal that uses the above cost structure. For example, total costs were calculated as follows:

Total costs = $4,967,462 + ($28.18 x 90,000)

= $4,967,462 + $2,536,200

= $7,503,662

What is your initial reaction to the analysis? Is it valid, or must it be redone? What variable in the total costs calculation is most likely to change?

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

General Management
1.2K views

What is corporate misconduct and what are some examples from businesses or individuals? Also can give...

Biology
1.2K views

the phenotype of the majority of the individuals in this population Question 5 1 point...

Basic Math
1.2K views

A sample of size 20 will be drawn from a population with mean 7 and...

Calculus
1.2K views

O O 1 1 2 2 0 2x 1 2 O 2x12 O 1 1...

Algebra
1.2K views

The City Wheels Taxi Company estimated on the basis of collected data that the number...

Algebra
1.2K views

How many and what parties are involved in a deed of trust?A) Three-the mortgagor, the...

Accounting
1.2K views

Bonds with a face value of $300,000 and a quoted price of 101 have a...

Accounting
1.2K views

The major components of the income statement are as follows: 1- Revenues, 2- operating income,...

Accounting
1.2K views

For an automobile manufacturer, the cost of a drfver's side air bag punchased from a...

Accounting
1.2K views

Under the revenue recognition principle, a good or service is considered transferred when ________. A)...

Accounting
1.2K views

- On April 1, Jiro Nozomi created a new travel agency, Adventure Travel. The following...

Accounting
1.2K views

46. LO.4 Nell and Kirby are in the process of negotiating their divorce agreement, to...