Chapter 12 Financial Management

Front 1

business expenses classification of direct or indirect costs.
reagents:
testing staff salary:
proficiency testing:
utilities:
rent:
chemistry analyzer:
management staff salary:

Back 1

reagents:direct
testing staff salary: direct
proficiency testing:indirect
utilities:indirect
rent:indirect; fixed
chemistry analyzer:indirect
management staff salary:indirect

Direct costs are expenses that can easily be traced directly to an end
product. In the laboratory setting, the end product is a billable test.
Examples are reagents, consumables, and hands-on technologist time.
In contrast, indirect costs are not directly related to a billable test, but
are necessary for its production. Indirect costs are often referred to as
overhead. Examples are proficiency testing and utility expenses.

Front 2

12000 test per month performed, reagent cost $.80, rent $6000/month
what is fixed cost per activity?

Back 2

12000 x $.80 per test= $9600 for reagents
$9600 + $6000= $15600
Therefore $15600/12000= $1.30 per test
This is the fixed cost per activity. If you increase the number of tests then you will decrease the fixed cost per activity

Front 3

% of the laboratory budget do salary costs constitute?

Back 3

50-70% of the budget

Front 4

depreciation

Back 4

the annual loss of capital item's value; a capital item would be a hematology analyzer or computer system

Front 5

1500 members in the HMO and you receive $1.65 PMPM, in the recent fiscal year the operating costs were $26,800. Profit or loss?

Back 5

amount laboratory received from HMO 1500 x $1.65 x 12 months=$29,700.....good, profit $2900

Front 6

two health screening tests covered by Medicare?

Back 6

PAP test and PSA

Front 7

the length of time required for an investment's net revenue to cover the cost of the initial investment is?

Back 7

payback

Front 8

when the volume of sales is such that the total revenue equals total cost, both fixed and variable, and profit is zero...this is termed?

Back 8

breakeven point