The following information summarizes charge and cost data for Dr. Jones during the last year:
Number of Cases 100
Charges $700,000
Nursing Charges $350,000
Lab Charges $200,000
Pharmacy Charges $50,000
Radiology Charges $100,000
a. Assume that Dr. Jones’ patients pay an average 80 percent of charges. Also assume cost to charge ratios of 0.90 in Nursing, 0.80 in Lab, 0.50 in Pharmacy, and 0.70 in Radiology. What is the total profit earned on Dr. Jones’ patients?
b. Dr. Jones contends that her profit is not accurate. Circle all valid reasons why she could be correct:
A. Cost to charge ratios vary across departments
B. Cost to charge ratios vary within departments
C. Both A and B
D. Neither A nor B
c. Would you lose money if Dr. Jones decided to leave and take her patients to another hospital? Provide one reason why it is highly likely that a loss would r