Organizational Costing

This assignment is designed to help you apply the core concepts of financial vs. managerial accounting, cost classification, cost-volume-profit (CVP) analysis, and the impact of different reimbursement models on profitability. You will evaluate a healthcare organizations cost structure and analyze how shifts in assumptions influence decision-making and financial outcomes.

Part I: Conceptual Foundations

1. Financial vs. Managerial Accounting

In 12 paragraphs, explain the primary differences between financial accounting and managerial accounting for our Central Florida Hospital organization. Address:

• The types of decisions each supports
• The primary users of each type of information
• Differences in reporting standards and time orientation

Part II: Cost Behavior and Cost Classification

You are the newly appointed Finance Manager for Central Florida Hospital,450-bed facility focusing on orthopedics and rehabilitation. Leadership wants to better understand the organizations cost structure.

1. Cost Classification Task

Using the list of sample costs below, classify each cost as fixed, variable, or semi-variable based on its relationship to volume. Provide a brief justification for each.

Cost List:

• Physical therapist hourly wages
• Depreciation on MRI equipment
• Medical supplies per procedure
• Electricity for an outpatient rehab unit
• Housekeeping salaries
• Orthopedic implant kits
• Weekend on-call staffing stipend
• Laundry and linen services

Write your classifications in a table or bullet points, explain your rational for the classification.

Part III: Cost-Volume-Profit (CVP) and Breakeven Analysis

Central Florida Hospital is launching a new Outpatient Joint Rehabilitation Program. You are asked to evaluate the programs financial feasibility using CVP analysis.

Program Data:

• Expected volume: 2,000 patient visits per year
• Charge per visit (fee-for-service): $150
• Variable cost per visit: $45
• Annual fixed costs: $180,000

1. CVP Calculations

Complete the following:

1. Calculate the contribution margin per visit.
2. b. Calculate the annual breakeven volume in visits.
3. c. Calculate the expected annual profit at 2,000 visits.
4. d. Recalculate the breakeven volume if fixed costs rise to $240,000.

Show your work on the attached Excel sheet.

Assignment Requirements

Submit a 4-5 page report that provides analysis and recommendations of the Outpatient Joint Rehabilitation Program that Central Florida Hospital is proposing and make sure to include Part I, II and III items from above including tables and figure from calculation, clearly label each section. Also upload the excel worksheet completed.