Question

Fill in missing values

Your answer is partially correct. Try again. Marla Mason owns and operates a home health care agency. She reported the following a Medical records automation and storage Medical testing supplies Insurance filing services Communications system lease udy Home Visit Hours 12,000 15,000 ? $4,250 $9,000 ? $4,800 $6,000 $2,000 ? 10,000 $5,000 $7,500 $4,000 17,500 $6,875 $13,125 ? $2,000 Identify each of the following costs as fixed, variable, or mixed. Items Type of Cost Medical records automation and storage TMixed Cost Medical testing supplies TVariable Cost Insurance filing services Variable Cost Communications system lease Fixed Cost Calculate the missing Values (Bound per with

Answer 1

Solution:

For computation mix type of cost of Medical records automation & storage, we will use High-low point method :

Variable cost per hour = ($6,875 - 5,000) / (17,500-10,000)

   = $1,875 / 7,500 = $ 0.25

Fixed cost = $5,000 - 10,000×$0.25 = $2,500

so, missing value at 12,000 of Medical records automation & storage cost = $2,500 + 12,000×$0.25

   = $5,500

Now, for Medical testing supplies variable cost per hour = $7,500 / 10,000 = $0.75

So, at 15,000 visiting hours, Medical testing supplies cost = 15,000×$0.75 = $11,250

Now, for Insurance filing services variable cost per hour = $4,000 / 10,000 = $0.40

So, at 17,500 visiting hours, Insurance filing services cost = 17,500×$0.40 = $7,000

Communication system lease cost is type of fixed. Hence, it is same at any level of visiting hours = $2,000

This above table be redrawn as follows:

Medical records automation and storage Medical testing supplies Insurance filing services Communications system lease $ $ $ $ Home Visit Hours 10000 12000 15000 5,000 $ 5,500 $ 4,250 $ 7,500 $ 9,000 $ 11,250 $ 4,000 $ 4,800 $ 6,000 $ 2,000 $ 2,000 $ 2,000 $ 17500 6,875 13,125 7,000 2,000