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Business Finance EBK HEALTHCARE FINANCE: AN INTRODUCTION

A table to illustrate cost structure and to define its elements. Introduction: The total cost is the sum of the variable cost and fixed cost of the production. The variable cost changes according to the units of production. Fixed cost remains irrespective of the volume of production. The table to elaborate cost structure is prepared as follows: Variable cost per test Fixed cost per year Particular Amount ($) Particular Amount ($) Laboratory supplies 20 Labor 90,000 Other fixed cost 60,000 Total 150,000 Volume Fixed cost Total variable cost Total cost Average cost per test 0 150,000 0 150,000 - Table 1 In the above table, laboratory supplies are variable expenses. These expenses vary directly with the volume. The variable expense per unit is $20. Therefore, for 0 unit the variable expenses are $0. The fixed cost remains constant irrespective of volume. Therefore, for 0 unit, the fixed cost is $150,000. The total cost is the sum of fixed cost and variable cost. For 0 unit, the total cost is $150,000. The average cost is calculated by dividing the total cost with the total number of units. Here, the average cost cannot be calculated because there is 0 unit of production.

A table to illustrate cost structure and to define its elements. Introduction: The total cost is the sum of the variable cost and fixed cost of the production. The variable cost changes according to the units of production. Fixed cost remains irrespective of the volume of production. The table to elaborate cost structure is prepared as follows: Variable cost per test Fixed cost per year Particular Amount ($) Particular Amount ($) Laboratory supplies 20 Labor 90,000 Other fixed cost 60,000 Total 150,000 Volume Fixed cost Total variable cost Total cost Average cost per test 0 150,000 0 150,000 - Table 1 In the above table, laboratory supplies are variable expenses. These expenses vary directly with the volume. The variable expense per unit is $20. Therefore, for 0 unit the variable expenses are $0. The fixed cost remains constant irrespective of volume. Therefore, for 0 unit, the fixed cost is $150,000. The total cost is the sum of fixed cost and variable cost. For 0 unit, the total cost is $150,000. The average cost is calculated by dividing the total cost with the total number of units. Here, the average cost cannot be calculated because there is 0 unit of production.

Solution Summary: The author explains the table to illustrate cost structure and define its elements. The variable cost changes according to units of production, while the fixed cost remains irrespective of volume.

EBK HEALTHCARE FINANCE: AN INTRODUCTION

EBK HEALTHCARE FINANCE: AN INTRODUCTION

6th Edition

ISBN: 9781567937428

Author: Gapenski

Publisher: YUZU

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EBK HEALTHCARE FINANCE: AN INTRODUCTION

Ch. 5.1 - Prob. 1.1STQ Ch. 5.1 - Prob. 1.2STQ Ch. 5.1 - Prob. 1.3STQ Ch. 5.1 - Prob. 2.1STQ Ch. 5.1 - Prob. 2.2STQ Ch. 5.1 - Prob. 2.3STQ Ch. 5.1 - Prob. 2.4STQ Ch. 5 - Prob. 1.1STQ Ch. 5 - Prob. 1.2STQ Ch. 5 - Prob. 2.1STQ

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