Scribd Logo
Upload

Welcome to Scribd!

  • 3 views

    Thin Co - J2011 Q

    Uploaded by

    Tawanda Herbert

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    Thin Co - J2011 Q

    Uploaded by

    Tawanda Herbert
    3 views2 pages

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    3 views2 pages

    Thin Co - J2011 Q

    Uploaded by

    Tawanda Herbert

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 2

    5 Thin Co is a private hospital offering three types of surgical procedures known as A, B and C.

    Each of them uses a


    pre-operative injection given by a nurse before the surgery. Thin Co currently rent an operating theatre from a
    neighbouring government hospital. Thin Co does have an operating theatre on its premises, but it has never been put
    into use since it would cost $750,000 to equip. The Managing Director of Thin Co is keen to maximise profits and
    has heard of something called ‘throughput accounting’, which may help him to do this. The following information is
    available:
    1 All patients go through a five step process, irrespective of which procedure they are having:
    – step 1: consultation with the advisor;
    – step 2: pre-operative injection given by the nurse;
    – step 3: anaesthetic given by anaesthetist;
    – step 4: procedure performed in theatre by the surgeon;
    – step 5: recovery with the recovery specialist.
    2 The price of each of procedures A, B and C is $2,700, $3,500 and $4,250 respectively.
    3 The only materials’ costs relating to the procedures are for the pre-operative injections given by the nurse, the
    anaesthetic and the dressings. These are as follows:
    Procedure A Procedure B Procedure C
    $ per procedure $ per procedure $ per procedure
    Pre-operative nurse’s injections 700 800 1,000
    Anaesthetic 35 40 45
    Dressings 5·60 5·60 5·60
    4 There are five members of staff employed by Thin Co. Each works a standard 40-hour week for 47 weeks of the
    year, a total of 1,880 hours each per annum. Their salaries are as follows:
    – Advisor: $45,000 per annum;
    – Nurse: $38,000 per annum;
    – Anaesthetist: $75,000 per annum;
    – Surgeon: $90,000 per annum;
    – Recovery specialist: $50,000 per annum.
    The only other hospital costs (comparable to ‘factory costs’ in a traditional manufacturing environment) are
    general overheads, which include the theatre rental costs, and amount to $250,000 per annum.
    5 Maximum annual demand for A, B and C is 600, 800 and 1,200 procedures respectively. Time spent by each
    of the five different staff members on each procedure is as follows:
    Procedure A Procedure B Procedure C
    Hours Hours Hours
    per procedure per procedure per procedure
    Advisor 0·24 0·24 0·24
    Nurse 0·27 0·28 0·30
    Anaesthetist 0·25 0·28 0·33
    Surgeon 0·75 1 1·25
    Recovery specialist 0·60 0·70 0·74
    Part hours are shown as decimals e.g. 0·24 hours = 14·4 minutes (0·24 x 60).
    Surgeon’s hours have been correctly identified as the bottleneck resource.

    6
    Required:
    (a) Calculate the throughput accounting ratio for procedure C.
    Note: It is recommended that you work in hours as provided in the table rather than minutes. (6 marks)

    (b) The return per factory hour for products A and B has been calculated and is $2,612·53 and $2,654·40
    respectively. The throughput accounting ratio for A and B has also been calculated and is 8·96 and 9·11
    respectively.

    Calculate the optimum product mix and the maximum profit per annum. (7 marks)

    (c) Assume that your calculations in part (b) showed that, if the optimum product mix is adhered to, there will be
    excess demand for procedure C of 696 procedures per annum. In order to satisfy this excess demand, the
    company is considering equipping and using its own theatre, as well as continuing to rent the existing theatre.
    The company cannot rent any more theatre time at either the existing theatre or any other theatres in the area,
    so equipping its own theatre is the only option. An additional surgeon would be employed to work in the newly
    equipped theatre.

    Required:
    Discuss whether the overall profit of the company could be improved by equipping and using the extra
    theatre.
    Note: Some basic calculations may help your discussion. (7 marks)

    (20 marks)

    7 [P.T.O.

    You might also like

    pFad - Phonifier reborn

    Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

    Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


    Alternative Proxies:

    Alternative Proxy

    pFad Proxy

    pFad v3 Proxy

    pFad v4 Proxy