Question

Cost behavior is the term used to summarize the impact of costs that are influenced by volume. On a financial statement, these costs are identified as variable costs. Understanding the role of both fixed and variable costs in a health care organization is key to targeting profitability centers.

Assume the role of a financial consultant. You have been hired by a small non-profit hospital, struggling with profitability. You have been given full access to all financial and operational information to perform your research and analysis.

• Create a one-page outline of the work you will be performing. This outline will be given to the CFO.
• On a separate page, using fictional information, depict the hospital's cost behavior.
  • You may include graphics, such as pie charts or graphs, to illustrate.
  • Cost drivers should be clearly defined
  • One-page in length
• On a separate page, provide a recommendation summary for the CFO. This should include specific areas of concern to address, as well as areas of strength to continue supporting. Your wording should be professional and concise.

Answer 1