BSBCUE608 - Manage Customer Engagement Operational Costs - Break Even Analysis - Operations Management Assessment Answer

Assessment Task:

BSBCUE608 - Operations Management Assessment Answer

Assessment 2

Brief Introduction:

With the flu season coming up the Hospital has decided to do a budget for the current year. Last year there were 400 adults and 700 children visited the hospital to get their flu shot and it costs $20 per person. After the flu shot lot of children requested for glow-in-the-dark Band-Aid which costs $2, while the normal Band-Aid costs $1. Every year the hospital campaigns the flu shot which gets them an additional 300 adults and 1000 children.

b. Calculate the revenue and operating budget to find out the total profit and loss.
Sales:
Adults: 400*$20 = $8,000
Children: 700*$20 = $14,000
Total = $22,000 

Variable Cost:
Adult: 400*$1 = $400
Children: 700*$2 = $1,400
Total = $1,800

Fixed Cost: 0

Revenue = Sales (Variable Cost +Fixed Cost)
= 22,000 (1,800 + 0)
= $20,200

c. Present the result in a graphical format. 
The hospital's flu season campaign brings forth additional patients resulting in actual patients as 300 adults and 1000 children. Perform variance analysis and answer the following questions. 

d. How does volume change affect budgeted revenue and expenses? 

Sales:
Adults: 300*$20 = $6,000
Children: 1000*$20 = $20,000
Total = $26,000 

Variable Cost:
Adult: 300*$1 = $300
Children: 1,000*$2 = $2,000
Total = $2,300

Fixed Cost: 0 
Revenue = Sales (Variable Cost +Fixed Cost)
= 26,000 (2,300 + 0)
= $23,700 

e. How does change in patient mix affect the departments finances?
Even though there was a change in the number of adults that actually visited, it was very less than expected. The hospital was still able to make a profit. They had more children who actually visited and hence spent more on glow in the band-aids and yet were able to make a profit of $23,700 that flu shot season. 

Assessment 3

Break-even Analysis

Scenario A Basis break-even point problem

Total fixed costs: $10,080
Variable cost per participant: $2.00
Ticket price per participant: $20
Contribution per participant: $20 - $2.00 = $18.00
Break-even quantity = $10,080/ $18.00 = $560
Break-even revenue = 560 * $20 = $11,200
We will need to sell 560 tickets in order to ensure the program is break even. 

Scenario B Variation of the basic break-even point problem

Total fixed costs: $10,000
Variable cost per participant: $5.00
Number of participants required: 500
Total costs = FC + VC * Q = 10,000 + (5*500) = $12,500
Contribution per unit = 12,500/500 = $25.00
Sales price per unit = 25 + 5 = $30.00

Scenario C Awards evening

Ticket price: $30 per person
Number of people attending: 100
Entertainment and prizes: $1,500
Total revenue = 100 * 30 = $3,000
Meals per person = (3,000 1,500)/100 = $15.00

Scenario D Calculating the break-even point of three possible venues for an event

Venue A:

Guests: 500
Fixed cost: $1,200
Variable cost: $5.20 
Sale price: Ticket per person: $10
Sales Revenue = 500 * 10 = $5,000
Total Costs: $1,200 + $5.20 * 500 = $3,800
Total Revenue: $5,000 3,800 = $1,200

Venue B: 
Guests: 1000
Fixed cost: $3,500
Variable cost: $5.20
Sale price: $10
Sales revenue = 1,000 * 10 = $10,000
Total Costs: $3,500 + (5.20 * 1,000) = $8,700
Total Revenue: 10,000 8,700 = $1,300.00

Venue C:
Guests: 2000
Fixed costs: $9,000
Variable cost: $5.20
Sale price: $10
Sales revenue = 2,000 * 10 = $20,000
Total Costs: $9,000 + $5.20 * 2,000 = $19,400
Total Revenue: 20,000 19,400 = $600

Venue B was able to make more revenue compared to A and C. 

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