6a Assignment Exercise 17-2 (p. 499): Three Level RevenueForecast Create the required table in an Excel document and submitthe assignment via the link provided below. You must calculate therevenue forecasts at each level (and show your work), but you donot need to create the line chart shown in Figure 17-5 (p. 209).Three eye-ear-nose-and-throat physicians decide to hire anexperienced audiologist in order to add a new service line to theirpractice.* They ask the practice manager to prepare a three-levelvolume forecast as a first step in their decision-making.Assumptions: for the base level (most likely) revenue forecast,assume $200 per procedure times 4 procedures per day times 5 daysequals 20 procedures per week times 50 weeks per year equals 1,000potential procedures per year. For the best case revenue forecast,assume an increase in volume of one procedure per day average, foran annual increase of 250 procedures (5 days per week times 50weeks equals 250). (The best case is if the practice gains aparticular managed care contract.) For the worst case revenueforecast, assume a decrease in volume of 2 procedures per dayaverage, for an annual decrease of 500 procedures. (The worst caseis if the practice loses a major payer.) *Audiologists weredesignated as “eligible for physician and other prescriberincentives” as discussed elsewhere. Thus the new service line was alogical move. Required Using the above assumptions, prepare athree-level forecast similar to the example in Figure 17–5 anddocument your calculations. Assignment Exercise 17–3: TargetOperating Income Acme Medical Supply Company desires a targetoperating income amount of $100,000, with assumption inputs asfollows: • Desired (target) operating income amount 5 $100,000 •Unit price for sales 5 $80 • Variable cost per unit 5 $60 • Totalfixed cost 5 $60,000 Compute the required revenue to achieve thetarget operating income and compute a contribution income statementto prove the totals. Assignment 18-4 Pareto rules Review thechapter text about the Pareto rule and examine Figure 18–4. Notethat the text says Pareto diagrams are often drawn to reflectbefore and after results. Assume that Figure 18–4 is the beforediagram for the Billing department. Further assume that the afterresults are as follows: Activity Code Number Process Denied BillsPDB 12 Review with Supervisor RWS 10 Locate Documentation LD 6 CopyDocumentation CD 5 33 Redo the Pareto diagram with the afterresults. (Use Figure 18-4 as a guide.) 2. Comment on the before andafter results for the Billing department.
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