Fifth edition Alnoor Bhimani Charles T. Horngren Srikant M. Datar Madhav V. Rajan Farah Ahamed

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solutions-manual-to-bhimani-et-al-management-and-cost-accounting-pearson-2012-1

8.20 Not-for-profit
institution.
(15–25 min)
1
Let
Q
= Number of patients
Revenues
− Variable costs − Fixed costs
= 0
SFr
400,000
− SFr Q − SFr 150,000 = 0
SFr
400Q = SFr 400,000 − SFr 150,000

Q
= SFr 250,000 ÷ 400

Q
= 625 patients
2
Revenues
− Variable costs − Fixed costs
= 0
SFr
360,000
− SFr Q − SFr 150,000 = 0
SFr
400Q = SFr 360,000 − SFr 150,000

Q
= SFr 210,000 ÷ 400

Q
= 525 patients The reduction in service is more than the 10% reduction in the budget. Without restructuring operations, the quantity of service units must be reduced by 16% (from
625 to 525 patients) to stay within the budget.
3
Let Y = Drug prescriptions per patient
SFr
360,000
− Y − SFr 150,000 = 0 Y
=
SFr
210,000

Y = SFr 336 Percentage drop (SFr 400 − SFr 336) ÷ 400 = 16%

Bhimani, Horngren, Datar and Rajan, Management and Cost Accounting, 5
th
Edition, Instructor’s Manual
© Pearson Education Limited 2012 Regarding requirements 2 and 3, note that the decrease in service can be measured by a formula
% Budget change Reduction in service =
% Variable cost The variable-cost percentage is (SFr 400 × SFr 625) ÷ SFr 400,000 = 62.5%
10%
% Reduction in service =
6.25%
= 16%

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