500 words summary and filling excel using the information- need accounting knowledge

Expense Forecasting and Benchmarking
Note: For those Assignments in this course that require you to perform
calculations you must:
? Use the Excel spreadsheet template for the Week 3 assignment
? Show all your calculations and formulas in the spreadsheet.
? Answer any questions included with the problems (as text in the Excel
To prepare:
? Review the information in the Week 9 and 10 Learning Resources dealing
with expense forecasting, profit and loss, break-even analysis, and
benefit and cost ratio analysis. Focus on how they are calculated and
how they can be used in decision making.
Carefully examine the information in each of the scenarios and provide
the necessary calculations. Using this information will help you answer
the questions. Note: All the scenarios will be submitted as one
document. Each scenario will be on a different tab in the spreadsheet.
Expense Forecasting
In this Application Assignment you calculate scenarios focusing on
benefit/cost ratio analysis, marginal profit and loss statements, and
break-even analysis. For these scenarios, you will utilize the provided
figures to perform calculations and then make recommendations about the
viability of the investment opportunities
Expense Forecasting Scenario
Your department has performed 20,000 procedures during the first six
months (January?June) of 20X1. Spending during that period of time was
$210,000 for fixed expense items and $1,200,000 for variable expense
items. Of those amounts, $50,000 of fixed expense money was spent on
preparing for a Joint Commission survey. Volume is anticipated to be 10%
higher in the second half of the year. On November 1st, two new
procedure technicians will begin work. The salary and fringe benefit
costs for each are $96,000/year. Based on the information provided,
prepare an expense forecast for 20X1.
Annualization for Fixed: (Adjusted Total for Year to Date Expense/6) *
12 =Total Annualized Amounts
Annualization for Variable (Adjusted Total for Year to Date Expense/
20,000) * 40,000 =Total Annualized Amounts.
Financial Analysis Cycle
Marginal Profit and Loss Statement Scenario
You are examining a proposal for a new business opportunity ? a new
procedure for which demand is expected to be 1,400 units the first year,
growing by 600 units a year thereafter. The price charged per procedure
is $1,000. The collection rate is anticipated to be 80%. Each procedure
consumes $300 of supplies. Salary cost is estimated to cost $540,000
each year, fringe benefits are 25% of salaries, rent for the facility is
$55,000/yr and operating cost are $120,000/yr.
1. Develop a marginal profit and loss statement for this business
Based on that analysis, should this opportunity be pursued?
Break-Even Analysis Scenario
You can charge $1,075 for a new service. Demand is anticipated to be
8,000 units a year. Your business is able to handle up to 16,500 units
annually, so capacity should not be a problem. The average collection
rate is 80%. The new service has annual fixed costs of $4,700,000.
Variable cost per unit of service is $420.
Question: Use break-even analysis to determine if this new service is
financially viable. If the business is not financially viable, what
steps could you take to make a case to proceed with implementation?
Explain your decision.
Benefit/Cost Ratio Analysis Scenario
You are considering the acquisition of a new piece of equipment with a
useful life of five years. This new technology will make your clinical
operation more efficient and allow for a reduction of 10 FTEs. The
equipment purchase price is $4,500,000 plus 10% installation fee. The
purchase price includes service for the first year, an item that has an
annual cost of $10,000. There is a potential for additional volume of
150,000 units in the first year, growing by 30,000 each year thereafter.
The price charged per unit is $15.00 with a 50% collection rate. The
staff being eliminated are paid $12.50 per hour. The fringe benefits
rate is 20%. The hurdle rate is 7.5%.
Questions: After reviewing Dr. Ward’s Video and the calculations below,
please answer the following questions:
? What is meant by benefit/cost ratio, average payback period and ROI
and why are the all-important to understand when purchasing new
? Based on this information, would you pursue this opportunity?
? Explain your decision in 250-500 words in the text box below.

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