Please help me answer these questions and show your work so I can understand the material. Please upload via excel.
Question A:
After several years of utilizing the da Vinci robot, new technologies and new equipment have entered the market. The most recent monthly operating expenses for da Vinci were presented:
Table 1:
Operating Expenses
Salaries and Wages $ 9,500.00
Employee Benefits $ 3,325.00
Supply Expense - da Vinci $ 20,000.00
Supply Expense - Other $ 5,000.00
Lease Expense $ 62,000.00
Maintenance Expense $ 14,000.00
Depreciation Expense $ 1,500.00
Allocated Hospital Expenses $ 10,000.00
$ 125,325.00
The salaries and wages related to da Vinci surgeries are the support personnel which include RN's, Medical Assistant's, etc. during the procedure. Employee benefits are related to the support personnel of the da Vinci procedures. The supply expense - other relates to expenses associated with the surgical procedures done by the da Vinci but are not directly for the da Vinci equipment itself (sponges, linens, etc.). The lease expense in the monthly lease for the da Vinci. Maintenance expense is the support agreement to maintain the da Vinci. Depreciation expenses are for other equipment located within the da Vinci surgery suite. Allocated Hospital Expenses are fixed overhead expenses that are incurred and would be absorbed by other departments if da Vinci surgeries did not occur.
For the purposes of the analysis, management has determined the following:
Table 2:
Average Cases Per Month 12
Average Net Revenue per case $ 6,500.00
1. Calculate the contribution margin. Be sure to identify the variable versus the fixed expenses.
2. Based on the determination you made in the above question, discuss the break-even point in number of cases per month. What are the implications associated with this number?
Table 3:
New Robot Cost $ 2,500,000.00
Cost of Financing 5.25%
Lease Term (Years) 4
Average Cases Per Month 20
Average Net Revenue per case $ 6500
3. Determine the monthly payment for the new lease for the da Vinci robot.
4. Assuming that other existing variable and fixed costs carryover for the next 4 years and that this is an operating lease, what is the net present value of the da Vinci robot assuming a 12% discount rate and a resale value of $500,000 at the end of the lease?
5. What is the new break-even point?
6. Is this a profitable venture for the hospital? If profitable, is it profitable enough? Why or why not? If it is not profitable, should the da Vinci robot be discontinued? Why or why not?
Question B:
The IMA Code of Ethics describes the ethical framework in which management accountants should operate. More often than not, decision makers ask management accounts to perform analysis based on certain facts and predictions. These analysis are turned in to potential models that are reviewed in order to make final decisions. In a hypothetical situation, you have performed all the analysis above and noted that the net present value of performing robotic surgical procedures exceed 15%. After reviewing your report, you become knowledgeable of information concerning a figure that was not part of the original calculations... Risk management has determined that the cost of lawsuits due to complications and potential loss of life associated with robotic procedures will reduce profitability to 3%. Management has decided to perform robotic procedures without taking into account your objections on the errors of your initial analysis.
So, what do you do? This question should be answered an in essay format with a clear beginning, middle and end. You should use transitions between paragraphs and be readable to a knowledgeable business person. This means you will need to discuss the IMA Code of Ethics and how it applies to this situation. This question should not exceed 5 pages double spaced. With that said, a one page answer will not suffice either.
Attachment:- Case Study.rar