Following Are the Income Statements for the North End Medical

Essay

Following are the income statements for the North End Medical Clinic for the years 2004 and 2005:
2004 2005
Patient Visits 12,000 16,000
Revenue $216,000 $288,000
Costs:
Nurses Salaries 80,000 120,000
Vaccine and Syringes 60,000 80,000
Miscellaneous Supplies 19,000 22,000
Administration 50,000 50,000
Surplus $ 7,000 $ 16,000
A nurse was added as patient visits increased in 2005. This nurse can handle up to 4,000 additional patients in the next period. Miscellaneous supplies include the cost of supplies for medical records. Administration is primarily salary cost of the clinic director.
a)Categorize each cost as fixed, variable, or mixed, and explain your categorizations.
b)If you have categorized a cost as mixed, use the high-low method to separate out the fixed and variable portions.
c)Develop a cost function for North End Medical Clinic.
d)Predict the cost for 18,000 patients in 2006.
e)List two factors that could affect patient volumes. Can the managers be certain that the volume of patients expected in 2005 will be 18,000? Explain.