Eldercare One, Two and Three Are Managed as a Profit

question 95

Multiple Choice

Eldercare One, Two and Three are managed as a profit centers by the parent company. Revenues were $1,200,000, $500,000 and $300,000, respectively, and patients numbered 270, 80 and 50, respectively. Insurance costs of $625,000 are allocated to each center based on number of patients. Eldercare One would be allocated insurance cost of:

• A)$421,875
• B)$208,333
• C)$125,000
• D)$168,750

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Definitions:

AIDS

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Malaria

A serious and sometimes life-threatening disease caused by parasites transmitted to humans through the bites of infected mosquitoes.

Cancer

A disease characterized by the uncontrolled division of abnormal cells in a part of the body.

Strokes

Medical conditions that occur when the blood supply to part of the brain is interrupted or reduced, preventing brain tissue from getting oxygen and nutrients, causing cells to die.