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A Mini Case On Basic Cost Concepts

The Robert Hospital rents space and beds to separate entities like a pediatrics department. For the year ended March 2021, the pediatrics department charged Rs. 70 per patient per day, had revenue of Rs. 12,26,400 serving 54 patients per day on average. Expenses charged to the pediatrics department are outlined in Tables 1 and 2. Table 1 shows expenses allocated based on patient days or bed capacity. Table 2 outlines required personnel levels based on annual patient days.

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Bhargav D.S.
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85 views2 pages

A Mini Case On Basic Cost Concepts

The Robert Hospital rents space and beds to separate entities like a pediatrics department. For the year ended March 2021, the pediatrics department charged Rs. 70 per patient per day, had revenue of Rs. 12,26,400 serving 54 patients per day on average. Expenses charged to the pediatrics department are outlined in Tables 1 and 2. Table 1 shows expenses allocated based on patient days or bed capacity. Table 2 outlines required personnel levels based on annual patient days.

Uploaded by

Bhargav D.S.
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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A Mini Case on Basic Cost Concepts

The Robert Hospital (P) Ltd. operates a general hospital but rents space and
beds to separate entities for specialized areas such as skin, pediatrics,
maternity and so on. The company charges each separate entity for common
services to its patients such as meals and laundry and for administrative
services such as billings, collections, and so. Space and bed rentals are fixed
for the year.

For the entire year ended March 31, 2021, the pediatrics department at
Robert Hospital charged each patient an average of Rs 70 per day, had a
capacity of 60 beds, operated 24 hours per day for 365 days, (with the
normal capacity utilization of 54 beds per day) and had revenue of
Rs.12,26,400.

Expenses charged by the hospital to the pediatrics department for the year
ended March 31, 2021 are in the following Table 1. The only personnel
directly employed by the pediatrics department are supervising nurses,
nurses and assistants. The hospital has minimum personnel requirements
based on total annual patient days. Hospital requirements of personal are
given in the following Table 2.

Table 1: Expenses (Pediatrics Department)

Basis of Allocation
Particulars Patient Days Bed Capacity
Dietary 42952
Laundry 30000
Laboratory 48700
Pharmacy 35000
Repairs 7200
General Services 158300
Rent 275320
Billing and Collection 78000
Other Expenses 18050
Total 259902 433620

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Table 2: Expected level of Operation Data

Annual patient days Assistants Nurses Supervising Nurses


10000 – 14000 21 11 4
14001 – 17000 22 12 4
17001 – 23725 22 13 4
23726 – 25550 25 14 5
25551 – 27375 26 14 5
27376 – 29200 29 16 6

Annual Salaries for each class of employee follow:


Supervising Nurses Rs 20,000; Nurse Rs 14,000; Assistants Rs. 5,000.

1. Ascertain the total variable cost.


2. Calculate Fixed Cost with the distinction between Fixed Cost incurred
and absorbed.
3. Is there any cost of the nature of mixed in the above case?

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