(Assessment of a Hospital's Accounts Receivable Collection Efficiency)

question 24

Essay

(Assessment of a hospital's accounts receivable collection efficiency)
Assess Plains Regional Hospital's accounts receivable collection efficiency based on the following set of facts:
a.Days' revenue in patient accounts receivable at December 31,2012,for Plains Regional Hospital - 76 days
b.Extracts from Plains Regional Hospital's calendar year 2013 financial statements:
Net patient accounts receivable,$16.4 million
Net patient service revenue,$75 million
c.Days' revenue in patient accounts receivable at December 31,2013 for hospitals of comparable size - 65 days

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Definitions:

Cost Formula

An equation used to predict costs at various activity levels, incorporating both fixed and variable components.

Activity Variance

The difference between the budgeted amount of activity and the actual amount of activity.

Manufacturing Overhead

All manufacturing costs that are not direct materials or direct labor, including expenses such as rent, utilities, and equipment depreciation.

Cost Formula

An equation used to calculate the total costs involved in the production of goods or services, incorporating both fixed and variable components.