Partial Operational and Financial Productivity; Medical Practice Family Medical Care (FMC)is a family medical practice with 6 physicians, a nursing staff of 8 to 10 nurses, and an administrativestaff that varies from 4 to 7 personnel. Rajat Patel, the chief physician at FMC, is interested in studyingthe efficiency of the practice as a basis to set some benchmarks for further improvement, for rewardinghis staff, and for comparing the efficiency of the FMC practice to other family medical practices. Heis able to get comparable data for other practices from industry sources. So that the data are consistentwith the industry sources, Patel has asked Marin & Associates, his accounting firm, to develop a set ofproductivity measures that would satisfy this requirement. Upon investigation, Joseph Marin finds thatthe measures to be used are the partial financial and operational productivity measures as defined inthe chapter. The following information is for the last 2 years for the FMC practice:Current Year Prior YearPatient visits 33,000 28,600Nursing hours used 20,300 19,400Administrative hours used 13,425 13,425Cost of nursing support per hour $39.00 $38.00Cost of administration per hour $25.56 $24.00[LO 16-2][LO 16-2][LO 16-2](Continued)Final PDF to printer704 Part Three Operational-Level Controlblo17029_ch16_671-712.indd 704 02/20/18 09:50 AMCurrent Year Prior YearIndustry average financial productivityNursing 0.035 0.034Administrative 1.120 1.140Required In your calculations, use 4 significant digits after the decimal point.1. Compute the partial financial productivity ratios for nursing and administrative support for the currentand prior year.2. Separate the change in the partial financial productivity ratio from the prior year to the current year intoproductivity changes, input price changes, and output changes.3. Write a brief memo from Joseph Marin to Rajat Patel interpreting the findings above
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Partial Operational and Financial Productivity; Medical Practice Family Medical Care (FMC)
is a family medical practice with 6 physicians, a nursing staff of 8 to 10 nurses, and an administrative
staff that varies from 4 to 7 personnel. Rajat Patel, the chief physician at FMC, is interested in studying
the efficiency of the practice as a basis to set some benchmarks for further improvement, for rewarding
his staff, and for comparing the efficiency of the FMC practice to other family medical practices. He
is able to get comparable data for other practices from industry sources. So that the data are consistent
with the industry sources, Patel has asked Marin & Associates, his accounting firm, to develop a set of
productivity measures that would satisfy this requirement. Upon investigation, Joseph Marin finds that
the measures to be used are the partial financial and operational productivity measures as defined in
the chapter. The following information is for the last 2 years for the FMC practice:
Current Year Prior Year
Patient visits 33,000 28,600
Nursing hours used 20,300 19,400
Administrative hours used 13,425 13,425
Cost of nursing support per hour $39.00 $38.00
Cost of administration per hour $25.56 $24.00
[LO 16-2]
[LO 16-2]
[LO 16-2]
(Continued)
Final PDF to printer
704 Part Three Operational-Level Control
blo17029_ch16_671-712.indd 704 02/20/18 09:50 AM
Current Year Prior Year
Industry average financial productivity
Nursing 0.035 0.034
Administrative 1.120 1.140
Required In your calculations, use 4 significant digits after the decimal point.
1. Compute the partial financial productivity ratios for nursing and administrative support for the current
and prior year.
2. Separate the change in the partial financial productivity ratio from the prior year to the current year into
productivity changes, input price changes, and output changes.
3. Write a brief memo from Joseph Marin to Rajat Patel interpreting the findings above
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