Homework Chapter 1-Managerial Accounting , the Business Organization, and Professional Ethics
1-40 Use of Accounting Information in Hospitals
Most U.S. hospitals do not derive their revenue directly from patients. Instead, revenues come through third parties, such as insurance companies and government agencies. Until the 1980s, these payments generally reimbursed the hospital’s costs of serving patients. Such payments , however , are now generally flat fees for specified services. For example, the hospital might receive $7,000 for an appendectomy or $28,000 for heart surgery--no more, no less. How might the method of payment change the demand of accounting information in hospitals? Relate your answer to the decisions of top management.
1-41 Cost and Benefits
Marks & Spencer, a huge retailer in the United Kingdom with sales of almost £ 8 billion, was troubled by its paper bureaucracy. Looked at isolation, each document seemed reasonable, but overall a researched reported that was substantial effort in each department to verify the information. Basically, the effort seemed out of proportion to any value received, and, eventually, the company simplified or eliminated many of the documents. Describe the rationale that should govern system design. How should a company such as Marks & Spencer decide what documents it needs and which can be eliminated?
1-42 Importance of Accounting
Some companies are run by engineers and other technical specialists. For example, a manager in division that is now part of ArvinMeritor, an $8.9 billion automotive parts supplier, once said that “there’d be sixty or seventy guys talking technical problems, with never a word on profits.” Other companies, especially consumer products companies such as General Mills, fill top management positions primarily with marketing executives. And still others, like Berkshire Hathaway with Warren Buffett as CEO, have top managers with...
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