Under Southdale Hospital's Established Rate Structure, the Hospital Would Have

question 20

Multiple Choice

Under Southdale Hospital's established rate structure, the hospital would have earned patient service revenue of $7,000,000 for the year ended December 31, 2017. However, Southdale did not expect to collect this amount because of charity allowances of $1,000,000 and discounts of $500,000 to third party payers. In May 2017, Southdale purchased bandages from Ace Supply Co. at a cost of $5,000. However, Ace notified Southdale that the invoice was being cancelled and that the bandages were being donated to Southdale. For the year ended December 31, 2017, how much should Southdale record as patient service revenue?

• A) $7,000,000
• B) $6,500,000
• C) $6,000,000
• D) $5,500,000

Understand the difference between favorable and unfavorable variances and their significance.

Learn about the various types of costs (fixed, variable) in budgeting and performance reports.

Apply cost estimates to calculate budget variances.

Interpret and calculate revenue variances in a budget performance context.

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Definitions:

Tax Rate

The percentage at which an individual or corporation is taxed.

Valuation Rate

A rate used to determine the current or projected worth of an asset or a company.

Market Value

The current price at which an asset or service can be bought or sold in the marketplace.

Assessed Valuation

The valuation placed on property by a public tax assessor for purposes of taxation.