Financial And Managerial Accounting
15th Edition
ISBN: 9781337902663
Author: WARREN, Carl S.
Publisher: Cengage Learning,
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Chapter 22, Problem 2MAD
Nursing staff budget
Mercy Hospital staffs its medical/surgical floors with nurses depending on the number of patients assigned to the floor and the severity of their condition. The index used to capture nurse effort is termed a relative value unit, or RVU. For example, taking vital signs for a single patient may be equal to one RVU. RVU’s are then summed to estimate the total RVU requirements for the floor. From this, the nursing staff budget is determined.
The medical/surgical floor is scheduled to have 25 patients for each day of the coming seven-day week. Some patients will require more nursing effort than others, depending on the severity of their conditions or their ages. The following table summarizes the expected RVU requirements for the patients:
A nurse earns $180 per day and is able to perform 40 RVUs per day.
- A. Determine the total number of RVUs expected per day for the coming week.
- B. Determine the total weekly nurse budget for the coming week.
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Mercy Hospital staffs its medical/surgical floors with nurses depending on the number of pa-
tients assigned to the floor and the severity of their condition. The index used to capture nurse
effort is termed a relative value unit, or RVU. For example, taking vital signs for a single patient
may be equal to one RVU. RVU's are then summed to estimate the total RVU requirements for
the floor. From this, the nursing staff budget is determined.
The medical/surgical floor is scheduled to have 25 patients for each day of the coming
seven-day week. Some patients will require more nursing effort than others, depending on
the severity of their conditions or their ages. The following table summarizes the expected RVU
requirements for the patients:
Number of Patients
RVUS per Day
5
20
8
25
10
30
40
A nurse earns $180 per day and is able to perform 40 RVUS per day.
a. Determine the total number of RVUS expected per day for the coming week.
b. Determine the total weekly nurse budget for the coming…
The pharmacy in a busy hospital uses pre-determined rates for absorbing total overheads, based on the
budgeted number of prescriptions to be handled. A rate of $7 per prescription has been calculated, and
the following overhead expenditures have been estimated at two activity levels.
Total overheads Number of prescriptions
$
97,000 13,000
109,000 16,000
During a particular period fixed overheads were $45,000.
Based on the data above, what was the budgeted level of activity in prescriptions to be handled during
the period in question?
A 13,000
B 15,000
C 16,000
D 33,333
Projected Revenues by Patient Services Department
Routine Care
Laboratory
Radiology
Assume that the hospital uses the direct method for cost allocation. Furthermore, the cost
driver for general administration and financial services is patient services revenue, while the
cost driver for facilities is space utilization.
a. What are the appropriate allocation rates?
b. Use an allocation table similar to Exhibit 6.7 to allocate the hospital's overhead costs to the
patient services departments.
Total revenues
Projected Costs for All Departments
Patient Services Departments (Direct Costs):
Routine Care
Laboratory
Radiology
Total costs
Support Services Departments (Overhead Costs):
Financial Services
Facilities
Housekeeping
General Administration
Human Resources
Total overhead costs
Total costs of both patient and support services
Projected profit
EXHIBIT 6.7
Kensington Hospital: Final Allocations
Support Department
(allocation rate)
Financial Services ($0.05556)
Facilities
Housekeeping…
Chapter 22 Solutions
Financial And Managerial Accounting
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