Question

Marla Mason owns and operates a home health care agency. She reported the following cost information for the first four months in 2017. 10,380 $5,842 $8,823 $7,785 ? Medical records automation and storage Medical testing supplies Insurance filing services Communications system lease Home Visit Hours 11,880 12,203 ? $5,978 $10,098 ? $8,910 $9,152 $6,468 ? 16,669 $7,717 $14,169 $6,468 Identify each of the following costs as fixed, variable, or mixed. Items Type of Cost Medical records automation and storage Medical testing supplies Mixed Cost Fixed Cost Variable Cost Insurance filing services Communications system lease

Answer 1

1.

Items	Type of cost
Medical records and automation and storage	Mixed cost
Medical testing supplies	Variable cost
Insurance filing services	Variable cost
Communications system lease	Fixed cost

Medical records and automation and storage:

Variable cost per unit = $7,717-5,842 / 16,669-10,380

Variable cost per unit = $1,875 / 6,289 = $0.30

Fixed cost = $7,717 - 5,000 (16,669*$0.30) = $2,717

Medical testing supplies:

Variable cost per unit = $8,823 / 10,380 = $0.85

Insurance filing services:

Variable cost per unit = $7,785 / 10,380 = $0.75

	Home visit hours
	10,380	11,880	12,203	16,669
Medical records and automation and storage	$5,842	$6,281 (2,717+11,880*0.30)	$5,978	$7,717
Medical testing supplies	$8,823	10,098	10,373 (12,203*0.85)	14,169
Insurance filing services	$7,785	8,910	9,152	12,502 (16,669*$0.75)
Communications system lease	$6,468	$6,468	$6,468	$6,468